Skip to Content
author's profile photo Former Member
Former Member

cost center & profit center

Dear all,

Anyone explain about profit center and cost center...

whats the difference?

regards

Sumi

Add a comment
10|10000 characters needed characters exceeded

Related questions

3 Answers

  • Posted on Aug 31, 2008 at 05:13 AM

    Profit Center: A unit of an organization that generates both revenue and expenses. Its goal is to have revenue exceed expenses.

    Cost Center: A unit of an organization that generates expenses and has no responsibility for generating revenue. Its goal is to adhere to expense budgets.

    Profit Center Accounting provides visibility of an organizationu2019s profit and losses by profit center. The methods which can be utilized for EC-PCA (Profit Center Accounting) are period accounting or by the cost-of-sales approach.

    Profit Centers can be set-up to identify product lines, divisions, geographical regions, offices, production sites or by functions. Profit Centers are used for Internal Control purposes enabling management the ability to review areas of responsibility within their organization.

    The difference between a Cost Center and a Profit Center is that the Cost Center represents individual costs incurred during a given period and Profit Centers contain the balances of costs and revenues.

    Regards,

    Ashok

    Add a comment
    10|10000 characters needed characters exceeded

  • author's profile photo Former Member
    Former Member
    Posted on Aug 29, 2008 at 02:27 PM

    The main aim of Profit center accounting is to determine profit for internal areas of responsibility. Further by assigning balance sheet items (Fixed assets, Receivables and Payables, Stocks) to profit centers, we can also analyze our companyu2019s fixed asset by profit center. Profit centers can be set

    up according to product lines, geographical factors (region, offices or production sites) or function (production, sales). We can divide our business into profit centers by assigning the profit centers to the various master data (materials, cost centers, orders, projects, Sales orders, assets, cost objects

    and profitability segments). Every profit center is assigned to the organizational unit controlling area.

    Cost Center provides information on the costs incurred by your business. Within SAP, you have the ability to assign Cost Centers to departments and /or Managers responsible for certain areas of the business as well as functional areas within your organization. Cost Centers can be created for such functional areas as Marketing, Purchasing, Human Resources, Finance, Facilities, Information Systems, Administrative Support, Legal, Shipping/Receiving, or even Quality.

    Regards

    Add a comment
    10|10000 characters needed characters exceeded

  • Posted on Aug 29, 2008 at 01:00 PM

    Hi,

    Profit Centre: it is that department responsible for cost as well as revenue of department .The department is called profit centre like "Autonomous Business Units".

    Cost Centre: it is that department responsible for cost spendings only like production department.

    for more check the linkS

    http://www.sap-basis-abap.com/fico/difference-between-profit-centre-and-profitability-analysis.htm

    http://www.geocities.com/royston76/method/m34.htm

    Regards,

    Biju K

    Add a comment
    10|10000 characters needed characters exceeded

Before answering

You should only submit an answer when you are proposing a solution to the poster's problem. If you want the poster to clarify the question or provide more information, please leave a comment instead, requesting additional details. When answering, please include specifics, such as step-by-step instructions, context for the solution, and links to useful resources. Also, please make sure that you answer complies with our Rules of Engagement.
You must be Logged in to submit an answer.

Up to 10 attachments (including images) can be used with a maximum of 1.0 MB each and 10.5 MB total.