Answer Posted / james bond

Cost element tells you the origin of cost(It is a cost
carrier) i.e. how the cost originates and is carried. There
are two types of cost elements
a. Primary
b. secondry

Reliance is laying down fiber optics for their broadband
portfolio in Mumbai. They have (to name a few)
1. Bought fiber optics (External)
2. Hire Labor to dug service territories (External)
3. Dispatch Engineers to supervise the operation (Internal)
Now each one represents a cost that will be incurred by
Reliance broadband. For 1.&3. you will create a cost element
and assign it to a GL account while 3. can be made as IO.
So a primary cost element
a. is a cost carrier
b. had subsequent GL account
c. can be directly posted to

while a secondary cost element
a. is a cost carrier
b. is active for controlling only


Hope this helps.....

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