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Thursday, September 6, 2012

Cost elements: Primary & Secondary

Cost center is a cost element classifies the organization's valuated consumption of production factors within a controlling area.
Cost center is an organizational unit within a controlling area that represents a defined location of cost incurred. It can be defined based on various criteria such as functional requirements, allocation criteria,physical location etc. 
Primary Element
Primary costs that originate outside the company; relate directly to the income statement in FI and must be 
included in the FI Chart of Accounts.
All Primary cost elements gets linked to Income statement.
Secondary Element
Secondary costs that result from internal allocation activities; NO relation to G/L accounts in FI. These 
accounts are exclusively for cost accounting and are only maintained in CO.



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