What is the difference between cost center and cost element in cost accounting and Oracle e business systems ?

Thanks for invitation

When costs are incurred, they are generally allocated to a cost centre. A cost centre acts as a collecting place for certain costs before they are analysed further. Cost centres may include the following. a department, a machine or group of machines and a project etc Cost centres are an essential building block of a costing system. They are the starting point for the following;

1 the classification of actual costs incurred

2. the preparation of budgets of planned costs

3. the comparison of actual costs and budgeted costs( management control).

A cost element of cost unit is a unit of product or service to which costs can be related. The cost unit is the basic control unit for costing purposes eg room in a hotel.

Oracle E- Business suite is the most comprehensive suite of integrated, global business applications that enable organisations to make better decisions, reduce costs and increase performance.

gl account and cost centre element appears to be the same. however, there is a lot of difference in between them. the main difference is the glaccount balance canot be used for any allocation, distribution purpose. however, the cost centre element can be allocated and distributed from one object to another object.

In cost accounting system, the purpose of measuring and adjusting the actual cost of the unity of the product requires the use of a range of specialist evidence, including:

· "Cost- Elements Chart".

· "Cost-Centers Chart".

· "Cost-Units Chart".

· "Cost-Accounts Chart". Operating letter accounting data systems. So that each guide contains a systematic plan to digitize vocabulary contains, these poor vocabulary was financial accounts or elements of costs or cost centers or responsibility centers. These figures represent the same tags used by the program outline in the design of the input operations, registration, search and retrieval, and processing that Atdmna software applications.

Without these numbers codification previous operations become slow, and prone to many errors, as data files sizes become overgrown, and a burden on the memory during operation.

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Answer added by: frank mwansa  ACCOUNTING LECTURER IS THE CORRECT ANSWER.

There are two modules related to this question which are "Financial Module" (FI) and "Cost Controlling Module" (CO). We need to understand the fundamental differences between such modules as follows;1. General Leger (GL) is using for FI module which will take an account on the financial terms like "Profit & Loss Account", "Balance Sheet Account", whereas2. Cost Code (CC) is using for CO module which will define the location where those revenue and/or expenses occuring in the "Profit & Loss Account" appear, for example, fasctory department, architectural department, building service department.3. Using of CC will benefit for controlling the cost in any areas of expenses whether relied on the planned budget or not.4. Using of GL, in another hand, will see more large view of accounting terms (including of profit and loss, cashflow, asset & liability & equity).In practical use, we can insert CC account together with any GL account for detailed information. For instance, we bought 100 tons of rebar for concrete structure of building A1 (in total of 3 buliding; A1, A2, A3), we define this expense in GL account as "Material Expenses" (GL no. 20100101) and "Material Cost for Concrete Structure of Building A1" (CO no A1-1001-0010), for example, so that we can complete both FI and CO in one time of purchase requisition.

i strongly agree with answers of sir frank mwansa  ACCOUNTING LECTURER .....

Thanks for invitation :- Cost center is defined as a location, person or an item of equipment for which cost may be ascertained and used for the purpose of cost control. Cost center where raw materials are handled for conversion in to finished product. By the nature of elements for materials cost, labour cost and other expenses. The elements are using for the purpose of centre for which cost is ascertained used for the purpose of cost control. The productivity is one, how you make difference can it scientifically in business or oracle system

Cost center indicates that this cost belongs to which head of account or place or project, while cost element defines the input of the units.

 

Internal Organizations and Cost Centers. Depending on the structure of your enterprise and your decisions about which organizations to represent Cost element is nothing but your Profit and Loss GL accounts you create in Finance