Cost Accounting

In this topic, we will look at the benefits of using cost accounting and describe how to manage it.

Here are some key points:

1. To use the cost accounting functions, you must define the profit centers or departments in the company as cost centers. 
2. When you create a cost center, the system automatically creates a distribution rule with the same name. This rule is configured so that the system posts all the costs or revenues to the relevant cost center. 
3. Indirect costs and revenues are not allocated directly to a cost center. Instead, you allocate them to one or more cost centers using an indirect distribution rule. In the distribution rule, you specify how the amount is to be allocated among the cost centers. 
4. To automatically include costs from the general ledger in cost accounting, link a distribution rule to accounts in the Chart of Accounts.

5. Each time you issue an amount to these accounts, the amount will be automatically allocated to the different departments according to the distribution rule definition.

6. You can change the distribution rule set in the G/L account when you issue a marketing document or a manual journal entry. 
7. For journal entries created from marketing documents and for manual journal entries, you can change the allocated distribution rule at any time. 
8. This distribution rule takes priority over the rule defined in the G/L account and in the marketing document. 

You can also download the document here for your records.