What are secondary cost elements typically used for in SAP?

Secondary cost elements in SAP are specifically designed to facilitate the tracking of internal costs that are not part of the primary cost flow. They are utilized primarily for internal cost accounting processes such as assessing and distributing overhead costs, allocating costs among different cost centers, or integrating alternative cost models within the organization.

Internal labor costs are a perfect example of secondary cost elements, as they represent the costs associated with employee labor that is charged internally within the company rather than through external sourcing. This allows businesses to gain visibility into the expenditure associated with their workforce and how it impacts various departments or projects, enabling better management and control over those costs.

By using secondary cost elements for internal labor costs, organizations can gain insights into productivity, performance, and budgeting. This approach promotes a comprehensive understanding of indirect costs and supports strategic decision-making processes in resource allocation and operational planning.