What is direct cost in SAP CO - Controlling?

SAP Term: direct cost

• Component: CO

• Component Name: Controlling

• Description: A cost that is directly and fully identifiable with a reference object according to the costs-by-cause principle. Because the reference object such as a cost object or the time period month, for example can influence whether a cost is considered a direct cost, the term "relative direct cost" is also used.

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• Key Concepts: 
  Direct cost is a term used in SAP Controlling (CO) to refer to costs that are directly related to the production of a product or service. These costs are typically associated with the materials, labor, and overhead used in the production process. Direct costs are also known as variable costs, as they vary depending on the amount of production. 
  
  How to use it: 
  In SAP Controlling, direct costs can be tracked and monitored using cost centers and cost elements. Cost centers are used to track the total cost of a particular activity or process, while cost elements are used to track individual components of the cost. Direct costs can be allocated to cost centers and cost elements in order to accurately track and monitor them. 
  
  Tips & Tricks: 
  It is important to accurately track and monitor direct costs in order to ensure that they are not overspending or under-spending on certain activities or processes. Additionally, it is important to ensure that direct costs are allocated correctly in order to ensure accurate reporting and analysis. 
  
  Related Information: 
  Direct costs are often contrasted with indirect costs, which are costs that are not directly related to the production process but still have an impact on the overall cost of production. Examples of indirect costs include administrative expenses, marketing expenses, and research and development expenses.