Cost Elements

A cost element corresponds to a cost generating item, such as a material cost, a work center cost, or a labor cost. Cost elements allow you to choose among a set of predefined cost elements connected to the system. You can also choose to enter your own cost element. A user defined cost element can be one of two kinds: a fixed cost element or a cost element based on a predefined cost element. Creating your own cost elements is the only way to create user defined overhead costs.

You should only use elements for creating overhead costs. Since it is possible to enter an element without an overhead type, elements can be ignored in the shop order process because only system generated elements can be used to capture non overhead costs, such as machine costs, labor costs, material costs, and subcontracting costs.

You can change the factor of any user-defined element except for the below mentioned:

Part-specific overhead trigger elements 501, 502, 141 and 601, and for material overheads using source element 501, for general overheads using source element 502, for delivery overheads using source element 141 and sales overheads using source element 601.

However, note that changing an element factor affects the system's calculation of every part cost using this element. In some cases, there could be thousands of parts connected to a very central element, such as machine cost or material cost.

The fixed cost element is a cost element serving as a fixed markup, while a cost element based on a predefined, system-generated cost element serves as an overhead element carrying a user defined percentage of the cost generated by the underlying cost element. For each cost element you define, you must define the overhead type.

Overhead Types

The overhead type tells the system when to use costs in the accounting system. All overhead types are system generated and correspond to a specific posting type in the system. Depending on the overhead type chosen, the overhead cost is attributed differently and is transferred to WIP (Work in Progress) at a different time, if the final carrier of cost is the basis of a shop order.

Predefined Cost Elements

When the system is installed, some predefined cost elements are installed. These system-generated cost elements are already connected to costs and drivers of costs throughout the system.

Note: The cost element 500 is not visible in Cost Elements, but it can be chosen as a source from within the source element's List of Values. This element acts only as the basis for elements with the overhead types Material Overhead or General Overhead If you want to capture actual Material Overhead cost in the shop order flow for purchased parts which use the weighted average inventory valuation method or inventory parts with part cost level set to Cost Per Serial, you should use a cost bucket for which the cost element source ID is 500 (Total Cost).