profit centre and cost centure

[former_member715153]

what is profit centre and cost centre

[Former Member · Accepted solution]

Hi Raghu ,

Technically speaking for me it was very difficult to get wat exactly this 2 things are ie Cost Center and Profit Center are , so it will better to give a basic life example to explain:

Lets consider there is Family Named THE Iyer's in SAP language this is our company.

Now in Iyer family, Father ie Mr.Iyer and Mother ie Mrs.Iyer both work and generate money, they both have 2 kids named A and B . A is around 25 yrs old n employed while B is too young abt 10yrs and studies in school

So now for our SAP Father and Mother are Cost centers who generate money and use them for thr children ie Profit Centers for our SAP

So our Cost center are alloted with funds and they use this cost center for thr respective profit centers

Now the difference between both Profit Centers A and B ,

A spends money as well as provides revenue while B only spends so thr is no revenue from B

This is wat is gr8 FUNDA abt CC and PC

I knw this was very boring but if u could get sumthng or even u found the story intrsting then pl at least revert not for points but jus a msg

Edited by: Vicky B on Jul 12, 2008 9:57 PM

[former_member715153]

ans

[Former Member]

Cost Center

Cost Center is an organizational unit in controlling area. It tracks where the exact cost has occurred in ur organization. As cost are incurred they are assigned to or posted to appropriate cost centers. These cost could include payrolls,rent,utility cost or any other cost assignable to a given cost center.

Profit center

It is an organizational sub-unit that bears responsibility for revenues as well as cost.

Profit centres are linked to cost centres in the cost centre master data.

Data flows from cost centres to profit centres.

if you want assign profit center in cost centre master data you can assign. but it is not mandatory.

A single cost centre can be assigned to a single profit centre where as a single profit centre can be assigned to multiple cost centres.

You can have a list of profit centres without cost centres in T-code: 1KE4

Refer: http://www.goflagship.com/articles/ckclas1.htm

Cost Object

The Cost Incurred in production of a product or service is collected on a cost object such as production order. Variuos types of cost objects can be used depending on ur requirements. They are Production Order , Sales Order, Process order Product Cost Collectors etc.

regards,

Chintan

[Former Member]

Hi , Visit the below link for details.

http://www.answers.com/topic/profit-center?cat=biz-fin

Thanks,