1. Process Cost Elements 1 Show Slide #1: Process Cost Elements
Title: Process Cost Elements
References:
DFAS-IN Regulation 37-1, Finance and Accounting Policy Implementation
DFAS-IN MANUAL FY, The Army Management Structure
GFEBS Performance Support Website (PSW)
Section I. Administrative Data
Academic Hours/Methods
02 hrs. / 00 min. DSL (small or large group discussion)
01 hrs. / 20 min. PE (Practical Exercise)
00 hrs. / 00 min. Test
00 hrs. / 00 min. Test Review
03 hrs. / 20 min. Total Hours
Section II. Introduction:
Method of Instruction: DSL - Discussion (large or small group)
Facilitator's to Learner Ratio: 1:25
Time of Instruction: 00 hrs. / 05 min.
Media: PowerPoint Presentation
Facilitator Material: Each primary facilitator should possess a lesson plan, evaluation sheet, scenario event list for exercises, and summary sheet containing the above noted references.
Learners Material: Learners should possess course handouts, access to all systems for exercises, summary sheet containing the above noted references portable laptop, and standard classroom supplies.
Note: "All required references and technical manuals will be provided by the local Command“
Motivator (Concrete Experience): A Cost Element is the lowest level component for reliably classifying costs and revenues (as negative costs) of a resource. In large organizations, such as the Army and other military departments, cost elements are critical to both budget submission and reporting to Congress. In order to provide reliable information, Army has standardized cost terms to provide a common language for understanding cost information. This lesson is only a small portion of the cost world, but it’s important for each of us to expand our cost vocabulary as we engage competition in a cost culture. 1

2. Terminal Learning Objective
Action: Process Cost Elements
Conditions: You are a Budget Analyst with access to a computer, the GFEBS training database, applicable GFEBS references, and awareness of Operational Environment (OE) variables and actors
Standards: With a minimum 80% accuracy, learners must demonstrate proficiency with:
Correlate Cost Elements and Revenue Elements
Show Slide #2: Terminal Learning Objective
Facilitator’s Note: Read/State the TLO
Action: Process Cost Elements
Conditions: You are a GFEBS data processor with access to a computer, the GFEBS training database, applicable GFEBS references, and awareness of Operational Environment (OE) variables and actors
Standards: With at least 80% accuracy:
Correlate Cost Elements and Revenue Elements
Safety Requirement: In a training environment, leaders must perform a risk assessment in accordance with DA PAM , Risk Management. Leaders will complete a DD Form 2977 RISK MANAGEMENT WORKSHEET during the planning and completion of each task and sub-task by assessing mission, enemy, terrain and weather, troops and support available-time available and civil considerations, (METT-TC). Local policies and procedures must be followed during times of increased heat category in order to avoid heat related injury. Consider the work/rest cycles and water replacement guidelines IAW TRADOC Regulation
Risk Assessment Level: Low.
Environmental Considerations: Environmental protection is not just the law but the right thing to do. It is a continual process and starts with deliberate planning. Always be alert to ways to protect our environment during training and missions. In doing so, you will contribute to the sustainment of our training resources while protecting people and the environment from harmful effects. Refer to FM Environmental Considerations and GTA ENVIRONMENTAL-RELATED RISK ASSESSMENT.
Evaluation: You will be given a graded 25 question exam, which will cover this task. A passing score on the exam is 80%.
Instructional Lead-In: There are numerous types of costs involved in operating an organization: direct costs, indirect costs, funded costs, unfunded costs, variable costs, fixed costs, recurring costs, non-recurring costs, avoidable costs, unavoidable costs----is that enough for you? Bottom line: do all of those costs mean something different? Yes, they do. It’s very important that we have a common understand of types of costs that are relevant to impact the decision-making process. We won’t get into all of these costs during this lesson, but it’s critical that we convey some basics so you’ll understand what needs to be entered in GFEBS. 2

3. Cost & Revenue Elements
Provide an overview of the costs and revenues that occur within an organization.
They also typically indicate the type of cost or revenue associated with a posting.
(FI) Financial
(CO) Controlling
External Reporting
Legal Reporting
Company Code
USSGL
G/L Account
Financial Statements
Proprietary vs. Budgetary
Cost Element is Bridge
Internal Reporting
Mgmt Reporting
Cost and Revenue Elements
Plans and Budgets
Cost Center
Internal Order
Show Slide #3: Cost Elements and Revenue Elements
Section III. Presentation.
Learning Step / Activity 1. Correlate Cost Elements and Revenue Elements:
Method of Instruction: DSL (large or small group discussion)
Facilitator's to Learner Ratio: 1:25
Time of Instruction: 01 hrs. / 00 min.
Media: PowerPoint Presentation, Handout
Facilitator’s Note: Learners should refer to any summary sheets and/or notes during this lesson.
Note: Animated slide
Facilitator's Note: Before facilitating this lesson, ask the learners which of the 21st Century Soldier Competency do they think pertain to this lesson. Facilitate a discussion on the answers given and at the end of the lesson revisit it and see if the learners still believe their choice are the same.
Note: For this lesson, these competencies should be talked about.
#1. Character and Accountability
#6. Communication and Engagement
#7. Critical Thinking and Problem Solving
#9. Tactical and Technical Competence
Facilitator’s Note:
a. Cost Elements and Revenue Elements: Cost Elements and Revenue Elements provide an overview of the costs and revenues that occur within an organization. They also typically indicate the type of cost or revenue associated with a posting, much in the same way that a General Ledger Account functions.
Facilitator’s Note: Review the VG with the students.
(Financial top left for external reporting, Legal Reporting, Company Code, United States Standard General Ledger (USSGL), General Ledger (GL) Account, Financial Statements, Proprietary VS Budgetary)
(What do Cost Element do?) – Cost Element is the bridge between Financial and Controlling or the bridge between External Reporting and Internal Reporting)
(Controlling (CO) top right for Internal Reporting, Management Reporting, Cost and Revenue Elements, Plans and Budgets, Cost Centers, and Internal Orders)
Facilitator’s Note: Every Primary Cost Element must have one, and only one, corresponding General Ledger revenue or expense account in the Financial (FI) module of GFEBS, but every General Ledger account will not have a corresponding Primary Cost Element, since most General Ledger accounts do not track revenue or expenses, and do not have a “costing” function. The G/L accounts and Primary Cost Elements are linked together so that every time a posting occurs to the G/L account in FI, the same posting also occurs to the corresponding Primary Cost Element in CO. This allows for the Controlling module to maintain a mirror image of the expense values posted in FI.
Facilitator’s Note: Primary Cost Elements have attributes similar to the expense Elements of Resource (EOR) used in the legacy accounting systems, in that they identify the type of resource being employed or consumed in the performance of the organization’s missions. In a number of cases, there is a one-to-one relationship between the legacy EOR and the GFEBS Primary Cost Element, with the 4 digit legacy EOR code replicated and imbedded as the last four characters in the Primary Cost Element.
Facilitator’s Note: The Primary Cost Element consists of a 4-character numeric field representing the US Standard General Ledger account, and a 4-character alpha/numeric field providing additional detail on the revenue and expense type, separated by a decimal, as shown in the example.
6100: US General Ledger Account (6100 is Operating Expenses)
26: OMB two character Object Class (26 represents Supplies and Materials)
17: The 7th position indicates whether the item is a depot level reparable (1), non-depot level reparable (2), or unclassified (3). The 8th position identifies the material category (7) represents Combat Vehicle Repair Parts
Facilitator’s Note: Primary Cost Elements are controlled at HQDA level; they may not be created, changed or deleted/inactivated by anyone other than the authorized organization.
Cost Elements is a bridge between Financial and Controlling. 3

4. Cost Element: Financials (FI) and Cost (CO) Bridge
Every Primary Cost Element must have one, and only one corresponding G/L Revenue or Expense account in the FI Module of GFEBS.
But every G/L account will not have a corresponding Primary Cost Element – since most G/L accounts do not track revenue or expenses and do not have a “Costing” Function.
The GL accounts and Primary Cost Elements are linked together so that every time a posting occurs to the G/L account in FI, the same posting also occurs to the corresponding Primary Cost Element in CO.
This allows for the Controlling Module to maintain a mirror image of the expense values posted in FI. FM
Show Slide #4: Cost Element: Financials (FI) and Cost (CO) Bridge
Facilitator’s Note: Every Primary Cost Element must have one, and only one, corresponding General Ledger revenue or expense account in the Financial (FI) module of GFEBS, but every General Ledger account will not have a corresponding Primary Cost Element, since most General Ledger accounts do not track revenue or expenses, and do not have a “costing” function. These G/L accounts and Primary Cost Elements are linked together so that every time a posting occurs to the G/L account in FI, the same posting also occurs to the corresponding Primary Cost Element in CO. This allows for the Controlling module to maintain a mirror image of the expense values posted in FI. With these values maintained on Primary Cost Elements in CO, the user is able to organize, aggregate, and display the information in CO in a variety of different ways, without having any affect on the values tracked in FI.
Examples: (1) PR is process in Spending Chain > Funding is checked in Funds Management > Recorded in Cost Management as a Cost and Tracked by Cost Object (Cost Element along with its corresponding GL account in FI and Cost Object is from CO Master Data Objects)> Obligation is Paid out of Financial > All recorded in ERP (Real Time) > Transferred to BI (Historical) > Reports made available > Now able to analyze Cost, Adjust Cost Module, Plan Future Cost.
(2) PP&E (Maintenance) > CJ20N Project Builders > Sender Receiver Relationship Established (Requester/Performer Relationship Established > Funds Management (FM) (Availability of funds) > Reimbursable (RM), Reimbursable Order (Direct Cite, Direct Charge, or True Reimbursable (Funds Transferred from Receiver to Sender-Requester/Performer) > Recorded in CO (based on the Master Data Element in CO – Cost Centers to Cost Center.
Facilitator’s Note: All Modules linked – Working together in GFEBS. Note: All processes in GFEBS are interacting with different module when any transaction is performed in the system. As each module works together their able to maintain an mirror image of all expense values that occur. SC CO RM FI
PP&E
All Modules are Linked - Working together in GFEBS 4

5. Financials and Cost Bridge (Cont.)
Primary Cost Elements and expense G/L Accounts are also linked to Commitment Items in the Funds Management (FM) Module so that any time a budget-relevant posting occurs in FI and/or CO, the Funds Management Module is updated.
Commitment Items in FM will be used to tack budget execution.
Every value posted against a Primary Cost Element must also be associated with at least one cost object (CC, IO, BP or WBS Element)
To allow the system to record the nature of the revenue or cost (the Primary Cost element) and the consumer/driver (the cost object).
Primary Cost Elements will be created or changed automatically each time a corresponding G/L revenue, expense account, or gains/loss is created or changed in the FI Module.
Show Slide #5: Cost Element: Financials (FI) and Cost (CO) Bridge (Cont.)
Facilitator’s Note: Primary Cost Elements and expense G/L Accounts are also linked to Commitment Items in the Funds Management (FM) module so that any time a budget-relevant posting happens in FI and/or CO, the Funds Management module is updated. Commitment Items in FM will be used to track budget execution.
Lastly, every value posted against a Primary Cost Element must also be associated with at least one cost object (Cost Center, Internal Order, Business Process, or WBS element), so the system can record the nature of the revenue or cost (the Primary Cost element) and the consumer/driver (the cost object).
Within the GFEBS solution, Primary Cost Elements will be created or changed automatically each time a corresponding G/L revenue, expense account, or gains/loss is created or changed in the FI module. 5

6. Primary / Secondary Elements
What are primary cost elements?
Elements of cost with a Corresponding Expense account in the General Ledger (G/L).
Similar to the current elements of resource (EORs) or Commitment Item.
What are secondary cost elements?
- Elements of cost that Do not have Corresponding Expense Accounts in the General Ledger.
- Track the internal movement of costs, such as allocations or settlements.
- Provide a more accurate view of where costs are incurred within the organization.
- Can be thought of as “Summary” Cost Elements.
Show Slide #6: Primary/Secondary Cost Elements
Facilitator’s Note: Primary Cost Elements are very similar to what the Army currently refers to as Elements of Resource (EORs). EORs have their basis in the Object Classes established by the Office of Management & Budget (OMB). Secondary Cost Elements do not have corresponding Expense Accounts in the General Ledger, and are used in the Controlling module. Secondary Cost Elements track the internal movement of costs, such as allocations or settlement that provide a more accurate view of the beneficiary of cost. Secondary Cost Elements can be thought of as “Summary” Cost Elements. Some examples of Secondary Cost Elements are:
(1) Assessment Cost Elements
(2) Cost Elements for Internal Activity Allocation
(3) Cost Elements for Order Settlement
Facilitator’s Note: When are Secondary Cost Elements used: when the movement is accomplished via an Assessment, Activity Allocation, Business Process Allocation, or Settlement (movement of costs via distribution require the use of Primary Cost Elements, since distributions move costs at the detailed, versus summary level).
Example: a TRADOC school may have an administrative office (a Cost Center) that supports several different teaching departments (Cost Centers), by handling student registrations, course and classroom scheduling, computer and audio-visual support, and printing and reproduction of course materials. The accumulated labor, materials, equipment, and other costs of the admin office can be added together and allocated to the individual departments via an assessment, using a Secondary Cost Element that identifies the costs as “admin support”. The admin support cost then becomes part of the total cost of each of the teaching departments, since they benefited from and contributed to the work performed by the admin office.
Facilitator’s Note: Now unlike Primary Cost Elements, Secondary Cost Elements will not be automatically created within the GFEBS. This is because Secondary Cost Elements do not have corresponding G/L Accounts that could trigger the automatic creation (since they are used only to move costs, not record original revenue or expense transactions). Therefore, Secondary Cost Elements will need to be manually created as needed to support Assessment, Activity Types Allocations, Business Processes Allocations, and Settlement performed in Cost Management. Secondary Cost Element must be established whenever revenue or costs must be moved from sending cost objects to receiving cost objects, when doing an Assessment, Activity Type Allocation, Business Process Allocation, or Settlement.
Facilitator’s Note: Within GFEBS, the secondary cost elements are used in lieu of the EOR27** series – Service Charge Function, to effect cost transfers.
Facilitator’s Note: The Secondary Cost Element mirrors the basic structure of the Primary Cost Element. The Secondary Cost Element consists of a 4-character field that identifies the assignment methodology and whether or not the cost assignment is budget, or non-budget relevant, and 4-characters providing additional detail on the type of cost being moved, separated by a decimal, as shown in the example.
Example: CIV1 – The 9300 Identifies the assignment methodology and whether or not the cost transfer is budget relevant or non-budget relevant; in this case, 9300 series indicates a budget relevant Activity Types Allocation. The CIV1 Identifies the type of cost being assigned; in this case, Civ1 is a civilian pay activity type, and civi8lian payroll costs are being moved from a sender cost object to a receiver cost object. 6

7. Revenue Elements What are revenue elements?
-Record types of revenue (or earnings) within a controlling area.
-Each has a corresponding revenue account in the General Ledger.
Army activities that generate revenue include, but are not limited to:
-Foreign Military Sales
-Forestry
-Fish and Wildlife License Sales
Show Slide #7: Revenue Elements
Facilitator’s Note: Revenue Elements record type of revenue (or earnings) within a controlling area. Each Revenue Element corresponds to a revenue account in the General Ledger. Any time a posting is made to a Revenue Account in the General Ledger, a posting is also made to the corresponding Revenue Element. There is no legacy element that corresponds to Revenue Elements. Army activities that generate revenue include, but are not limited to:
(1) Foreign Military Sales
(2) Forestry
(3) Fish and Wildlife License Sales 7

8. GFEBS Cost Objects VS. Legacy Data Elements
Primary Cost Elements and Secondary Cost Elements their purpose and corresponding Legacy Data Elements
Show Slide #8: GFEBS Cost Objects VS. Legacy Data Elements
Facilitator’s Note: Review VG #6 with the Students – Primary Cost Elements and Secondary Cost Elements their purpose and corresponding Legacy Data Elements. (Primary Cost Elements, Purpose Expenses and Revenues, Legacy Data Element Elements of Resources (EOR) 6000 Series) (Secondary Cost Elements, Purpose Cost Movement (Budgetary and Non-Budgetary, Legacy Data Element Cost Transfers e.g. EOR 2700) 8

9. Conduct Practical Exercises
Show Slide #9: Conduct Practical Exercises
Practical Exercise / Create Cost Elements
Method of Instruction: PE - Practical Exercise (Hands-On/Written)
Facilitator to Learner Ratio: 1:25
Time of Instruction: 01 hrs. / 00 min.
Media: Printed Reference Material, Practical Exercise, Handout
General Information: (Introduction / Objective) this practical exercise simulates a scenario that measures your ability to properly Create a Primary Cost Elements via t-code KA01; Display GL Account via T-Code FS00; Create Secondary Cost Element via t-code KA06; and Change Cost Element via t-code KA02.
Special Instructions: N/A 9 9

10. Walkthrough: Transaction Code KA01 Conduct Practical Exercise 15.1
Practical Exercise: Create Primary Cost Element
Walkthrough: Transaction Code KA01
Conduct Practical Exercise 15.1
All Master Data (Cost Element) are created in the system. Perform this
Transaction; The system will display an Informational Message “that the
Cost Element already exist. Example: Create Cost Element B1
(O/E Military Pay).
Show Slide #10: Practical Exercise: Create Primary Cost Element
Facilitator’s Note: Walkthrough: Create Primary Cost Elements Transaction Code KA01. Conduct Practical Exercise All Master Data (Cost Element) are created in the system. Perform this
Transaction; The system will display an Informational Message “that the Cost Element already exist. Example: Create Cost Element B1 (O/E Military Pay). 10

11. Walkthrough: Transaction Code FS00
Practical Exercise: Display GL Account / Primary Cost
Walkthrough: Transaction Code FS00
Follow the Menu Path to access Edit G/L Account chart of Accts Data.
Menu>Environment>Create General Ledger Account>In Chart of Accounts
Using T-Code KA01 (Primary) or KA06 (Secondary)
Show Slide #11: Practical Exercise: Display GL Account / Primary Cost
Facilitator’s Note: Walkthrough: Display GL Account (T-Code FS00) Have students to display GL Account/Primary Cost Element in GFEBS. Follow the Menu Path to access Edit G/L Account chart of Accts Data. Menu>Environment>Create General Ledger Account>In Chart of Accounts Using T-Code KA01 (Primary) or KA06 (Secondary). 11

12. Walkthrough: Transaction Code KA06 Conduct Practical Exercise 15.2
Practical Exercise: Create Secondary Cost Element
Walkthrough: Transaction Code KA06 Conduct Practical Exercise 15.2
Use this procedure to create a Secondary Cost Element. Secondary Cost
Elements track the internal movement of costs, such as allocations or
Settlements that provide a more accurate view of the beneficiary of costs.
Secondary Cost Elements can be thought of as “Summary” cost elements.
Perform this procedure when you receive notification that a secondary cost
element needs to be created.
Show Slide #12: Practical Exercise: Create Secondary Cost Element
Facilitator’s Note: Walkthrough: Create Secondary Cost Element Transaction Code KA06. Conduct Practical Exercise Use this procedure to create a Secondary Cost Element. Secondary Cost Elements track the internal movement of costs, such as allocations or Settlements that provide a more accurate view of the beneficiary of costs. Secondary Cost Elements can be thought of as “Summary” cost elements. Perform this procedure when you receive notification that a secondary cost element needs to be created. 12

13. Walkthrough: Transaction Code KA02 Conduct Practical Exercise 15.3
Practical Exercise: Change Cost Element
Walkthrough: Transaction Code KA02
Conduct Practical Exercise 15.3
This is a Master Data Element: Only the Centralized or Decentralized
Master Data Maintainer may change Master Data. The Cost Element
already exist in the system with a corresponding G/L Account.
Show Slide #13: Practical Exercise: Change Cost Element
Facilitator’s Note: Walkthrough: Change Cost Element Transaction Code KA02. Conduct Practical Exercise This is a Master Data Element: Only the Centralized or Decentralized
Master Data Maintainer may change Master Data. The Cost Element already exist in the system with a corresponding G/L Account. 13

14. LSA #1 Check on Learning
Q1: Name two Army activities that generate revenue, but are not limited to. A1: Q2: T/F A Primary Cost Element does not have a corresponding expense account in the General Ledger (G/L)? A2: Q3: What cost elements provide a more accurate view of where costs are incurred within the organization? A3:
Forestry (2) Fish and Wildlife License Sales (3) Foreign Military
Sales
False
Show Slide #14: LSA #1 Check on Learning
NOTE: Read and ask the following check on learning question and facilitate discussion on answers given.
NOTE: The answer to each question will appear when you hit enter.
Q: Name two Army activities that generate revenue, but are not limited to.
A: (1) Forestry (2) Fish and Wildlife License Sales (3) Foreign Military
Sales
Q: T/F A Primary Cost Element does not have a corresponding expense account in the General Ledger (G/L)
A: False
Q: What cost elements provide a more accurate view of where costs are incurred within the organization?
A: Secondary Cost Elements
Facilitator’s Note: Additional questions for the students;
Q: True or False? Any time a posting hits the expense account in the General Ledger,
a posting is also made to the Primary Cost Element?
A: True
Secondary Cost Elements 14

15. LSA #1 Summary 15 Show Slide #15: LSA #1 Summary
Facilitator's Note: On this part of the lesson, we identified the Definition and Purpose of Primary, Secondary and Revenue Elements. We also;
Cost Elements and the bridge between the FI and CO Module.
Discussed the fact that the Primary CO are controlled at HQDA level.
Talked about the control over establishing, deleting, or changing Cost Elements.
“Or”
NOTE: Have one learner from each group to explain the most important take away to them from this lesson. Facilitate a discussion on each answer. 15

16. Questions? 16 Show Slide #16: Questions?
Facilitator’s Note: Field any questions that the student’s may have. 16

17. TLO Summary Action: Process Cost Elements
Conditions: You are a Budget Analyst with access to a computer, the GFEBS training database, applicable GFEBS references, and awareness of Operational Environment (OE) variables and actors
Standards: With a minimum of 80% accuracy, learners must demonstrate proficiency with:
Correlate Cost Elements and Revenue Elements
Show Slide #17: TLO Summary
Facilitator’s Note: Restate the TLO
Action: Process Cost Elements
Conditions: You are a Budget Analyst with access to a computer, the GFEBS training database, applicable GFEBS references, and awareness of Operational Environment (OE) variables and actors
Standards: With at least 80% accuracy:
Correlate Cost Elements and Revenue Elements
“Or”
Facilitator’s Note: During the past blocks of instruction, we started with identifying Key terms associated with Cost Elements. We then;
Reviewed Cost Element and Revenue Elements
Reviewed Primary and Secondary Cost Element
Reviewed the Criteria for Creating
Performed Walkthrough PEs (KA01,KA06,KA02)
Facilitator's at this time, have one learner from each group to explain the most important take away to them from this lesson. Facilitate a discussion on each answer. 17