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    SAP Cost Center - Profit Center

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    Claudio Bezerril
    This document provides information about cost centers and profit centers in SAP. It defines cost centers and profit centers, explains why they are required and how to create them. Cost centers are used to track indirect costs, while profit centers are independent units that track revenue, costs and profits. The document describes how to create cost centers and cost center groups using transaction codes KS01, KS02 and KS03. It also explains how to create profit centers and profit center groups using transaction codes KE51, KE52, KE53 and KCH1.

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    © All Rights Reserved
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    SAP Cost Center - Profit Center

    Uploaded by

    Claudio Bezerril
    220 views14 pages
    This document provides information about cost centers and profit centers in SAP. It defines cost centers and profit centers, explains why they are required and how to create them. Cost centers are used to track indirect costs, while profit centers are independent units that track revenue, costs and profits. The document describes how to create cost centers and cost center groups using transaction codes KS01, KS02 and KS03. It also explains how to create profit centers and profit center groups using transaction codes KE51, KE52, KE53 and KCH1.

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    SAP Cost Center _ Profit Center

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    This document provides information about cost centers and profit centers in SAP. It defines cost centers and profit centers, explains why they are required and how to create them. Cost centers are used to track indirect costs, while profit centers are independent units that track revenue, costs and profits. The document describes how to create cost centers and cost center groups using transaction codes KS01, KS02 and KS03. It also explains how to create profit centers and profit center groups using transaction codes KE51, KE52, KE53 and KCH1.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    220 views14 pages

    SAP Cost Center - Profit Center

    Uploaded by

    Claudio Bezerril
    This document provides information about cost centers and profit centers in SAP. It defines cost centers and profit centers, explains why they are required and how to create them. Cost centers are used to track indirect costs, while profit centers are independent units that track revenue, costs and profits. The document describes how to create cost centers and cost center groups using transaction codes KS01, KS02 and KS03. It also explains how to create profit centers and profit center groups using transaction codes KE51, KE52, KE53 and KCH1.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 14

    Rajesh Sharma

    SAP Certified Consultant


    Activate Manager (SAP Activate-05
    ERP Sourcing & Procurement6.0,
    SAP S/4 HANA Sourcing & Procurement,
    SAP EWM 9.5
    SAP ERP

    Cost Center
    &
    Profit Center
    Topics
    • What is Cost Center?

    • Why a Cost Center is required?

    • How create a Cost Center?

    • How create a Cost Center Group?

    • What is Profit Center?

    • Why Profit Center is required?

    • How create Profit Center?

    • How create Profit Center Group?


    What is Cost Center
    A cost center is defined as a
    component in an organization that
    adds to the cost and indirectly Organization
    adds to the profit of the
    organization. Examples include
    Marketing and Customer Service.
    Logistics Administration Production
    A company can classify a
    business unit as follows:

    • Profit Center Production


    Energy Department 1
    • Cost Center Purchase
    Line
    • Investment Center Dept
    .1
    Accounting
    Warehouse
    An organization can be classified
    as cost center because cost is
    easy to measure.

    Cost Center Hierarchy look as


    follows shown in figure
    Why a Cost Center required?
    A cost center is a location where the costs are incurred. It can be setup based on
    areas of responsibility, functional requirements, allocation criteria, geographical
    locations or activities or services provided. Its purposes is to provide cost related
    information in Overhead Cost Accounting for which cost centers are grouped into
    units of decision making, control and responsibility. To map this structure, Cost
    Center is placed in cost center standard hierarchy.
    How Create a Cost center?
    To create a Cost Center T-Code is
    KS01-Create, KS02-Change, KS03-
    Display
    Path is as follows:
    SAP Easy Access Screen➔ SAP
    Menu➔ Accounting➔ Controlling➔
    Cost Center Accounting➔ Master
    Data➔ Cost Center
    Next screen
    • Enter the new cost center number
    • Enter the validity dates of new cost
    center
    Optional – in reference section
    • In the cost center field you can enter a
    reference cost center if the details are
    similar to new cost center.
    • In the controlling area, you can enter
    the reference cost center’s controlling
    area
    Click on Master Data Enter
    The Name, Description,
    Cost Center category,
    Person Responsible,
    Hierarchy area the
    Company code
    Currency, profit center
    Control Tab appropriate
    Indicator Click on save
    How Create a Cost center group?
    Click on Master Data Enter
    The Name, Description,
    Cost Center category,
    Person Responsible,
    Hierarchy area the
    Company code
    Currency, profit center
    Control Tab appropriate
    Indicator Click on save
    What is Profit Center?
    A Profit Center is an organizational
    unit in accounting that reflects a
    management-oriented structure of
    the organization for the purpose of
    internal control. You can analyze
    operating results for profit centers
    using either the cost-of-sales or
    the period of accounting approach
    Why a Profit Center is required?
    The Primary objective of Profit Center is to represent an independent
    organizational sub unit that operates practically independently in the market,
    bears responsibility for it’s own costs and revenue, and can be expended to
    become an investment center or can be treated as a Company within a
    company. The profit center approach embodies the increasing
    reestablishment between internal and external accounting, functioning as a
    connecting link between two accounting concepts.

    Profit Center Accounting help in answering the Questions as follows:


    1. How much is the revenue?
    2. How much is the cost of goods manufacturing?
    3. How much is the contribution margin?
    4. How much is the administrative and sales costs?
    5. How much is the operating profit?

    Return On Investment (ROI), Economic Value Added (EVA), and cash flow
    analysis are possible at profit center level.
    How Create a Profit Center?
    To create a profit center
    T-Code: KE51-Create,
    KE52-Change, KE53-Display
    Menu Path
    SAP Easy Screen➔ Financial
    Accounting➔ Controlling➔
    Profit Center Accounting➔
    Profit Center➔ Individual
    Processing➔ KE51-Create
    Next screen enter your
    controlling area company code,
    Next screen enter all required
    entry, click on save
    Click on Icon near drill down
    message display on the screen
    How Create a Profit Center Group?
    T-code – KCH1
    SAP Easy Screen➔
    Accounting➔ Controlling➔
    Profit Center Accounting➔
    Master Data➔ Profit Center
    group➔ KCH1-Create, Next
    screen enter controlling area,
    next screen, enter group name
    press enter then enter
    description click on save
    Thank You …………

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