What do you use secondary cost elements for?

Secondary cost elements are specifically designed for use within Cost Accounting (CO) in SAP. They allow organizations to allocate costs internally among different cost centers or internal orders, enabling more effective tracking and management of resources and expenses within the company's internal environment.

By using secondary cost elements, businesses can perform cost allocations, which may include assessing how much of a certain cost should be allocated to a specific department based on its usage, and conducting settlements, where costs from one cost object are settled to another at the end of a period. This facilitates a clearer understanding of cost behavior and resource consumption internally, which is crucial for decision-making and strategic planning.

In contrast, primary cost elements pertain to costs that are directly traceable to financial accounting and external reporting. Secondary cost elements do not serve external reporting purposes or aid in categorizing fixed assets; instead, they play a vital role in the internal financial processes of an organization.