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Week 6 - Integrating FI and CO (Cost Objects (a resource sacrificed or…
Week 6 - Integrating FI and CO
The Cost Element
Secondary
costs elements
internal cost flows
defined in CO only.
primary
cost element,
expense accounts
Revenue elements
Before you can create primary cost elements in CO, you first need to
create them as G/L accounts in FI
.
cost center
- cost-carrying object (such as a cost center) to identify the
origin
of the costs
The need to
trace costs (revenues)
to a cost (profit) center to
assist with management decision making
plan, co-ordinate and control the enterprise’s activities
Management need to know the cost of things such as the cost of running a department, the cost of a product, or the cost of a project, etc.
Cost Objects
a resource sacrificed or foregone to achieve a specific objective
guide decisions,
managers
need to know
the cost of ‘something’
called the cost object
Activity, product or service, project, department, or program
Accumulation and Allocation
Direct and Indirect Costs
Cost Driver
Variable and Fixed Costs