COST ACCOUNTING
COST MANAGEMENT SYSTEMS
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Users can define any number of cost elements.
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It is the most granular level of cost captured by upstream systems such as procurement, accounts payable, and manufacturing.
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It is the granularity at which costs are tracked and accounted.
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It is user-defined.
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The mapping of cost components into cost elements is user-defined.
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Detailed explanation-1: -Definition. Cost elements classify an organization’s valuated consumption of production factors within a controlling area . A cost element corresponds to a cost-relevant item in the chart of accounts .
Detailed explanation-2: -The cost element categoryhas a technical control function. It determines whether you can post to a cost element directly or indirectly. Direct posting means: You post a fixed amount to an account by specifying the account number. You can post directly to all primary cost elements.
Detailed explanation-3: -A cost element corresponds to a cost-relevant item in the chart of accounts. Basically, it can be any type of element at the lowest level in a business where costs can flow to. Cost elements as a concept range from ledger accounts to all cost-relevant resources. Currently, Cost accounting supports ledger accounts.
Detailed explanation-4: -Cost Element Accounting is the area of cost accounting where you track and structure the costs incurred during a settlement period. It is thus not an accounting system as such, but rather a detailed recording of data that forms the basis for cost accounting.