Whats the purpose of cost centers?

[Former Member]

Hi all,

Whats the purpose of cost centers? Especially in case where cost centers are assigend to the positions.

Thanks,

Rashmi

[former_member47879]

An organizational unit within a controlling area that represents a defined location of cost incurrence.

The definition can be based on:

• Functional requirements

• Allocation criteria

• Physical location

• Responsibility for costs

[Former Member]

Hi,

A cost center is part of an organization that does not produce direct profit and adds to the cost of running a company

In a Cost Center, inputs or expenses are measured in monetary terms, but output is not. Managers of these units are typically evaluated by means of productivity measures that relate the quantities of inputs used to generate the required outputs. They are evaluated on the cost efficiency with which they use a mix of inputs (labor, materials, and outside services).

Cost centers are divisions that add to the cost of the organization, but only indirectly add to the profit of the company.

Where cost centers are assigend to the positions?

We will assign the cost centers to position using the relationship(1001IT) infotype using PO10, PP01, Go to PO13, PP01- select the position object, id, select the relationship IT and create .

And assign account assignment feature(1008IT) in this infotype we will maintain the controlling area and company code.

Again this position will assign to person(master data)

Regards

Devi

[Former Member]

Hi,

Additionally from FI point of view

An employee is aatched to a Cost center thru a position in IT0001

In Posting a document , for some GL accounts posting the company requires to post the Amount based on cost center and Business Areas to get to know the expense statement for a particular BA and a CC

For eg Basic WT .

Basic (1.) WT ---> (2.)Sym Acc --> (3.)GL Acc -> Cost center/B.A.-> Employee

.

Employees are linked to a CC & BA of teh Wt will form in the expense report and the jornal report

Regards

Hemant V. Mahale

Edited by: Hemant Mahale on Apr 8, 2009 10:25 AM

[former_member632729]

Hi,

Cost Center

1. Cost center which controls and maintain the cost relevant activities of the company. It is controlled by FICO peoples. Work centers are the exact work location of the employee where the company doing the daily transactions.

2. Cost centre is an object used to refer to work centre activities are going on from cost point of view which is important from cost point of view. Work centers are the objects (physical locations) where actual work takes place

3. Cost Center is for assigning Symbolic acounts related for Posting in GL Accounts.

Cost Centers (K)

Cost centers are maintained in Financial Accounting. Each organizational unit will be either assigned a default cost center or will inherit a default cost center from the supervising organizational unit.

The default cost center, in combination with a fund, will be used as the default payroll account for the organizational unit. The default cost center will ONLY be used if the cost distribution data for an employee is invalid at the time of payroll posting.

The default cost center assigned to the organization unit will also be used during the Budget process to extract employees into the correct budgeting groups.Prior to making any changes to default cost center assignments, it is critical that the changes be confirmed with the Financial Accounting and Budget areas.

[sikindar_a]

Cost Centres are not directly Assigned to Positions

they are assigned to Org Units and the postions which belongs to that org unit will get defaulted to that Org units

Cost Centre Can be Assigned at the OM Level and also PA level (IT0027) Assigned to PERNER

KS01 - Create

KS02 - Change

KS03 - Display

KS04 - Delete

and the rest was been updated by Praveen

Edited by: Sikindar on Apr 8, 2009 8:57 AM

[Former Member]

Hi Rashmi,

A cost center is part of an organization that does not produce direct profit and adds to the cost of running a company

In a Cost Center, inputs or expenses are measured in monetary terms, but output is not. Managers of these units are typically evaluated by means of productivity measures that relate the quantities of inputs used to generate the required outputs. They are evaluated on the cost efficiency with which they use a mix of inputs (labor, materials, and outside services).

Cost centers are divisions that add to the cost of the organization, but only indirectly add to the profit of the company.

Regards,

Praveen

[Former Member]

Thanks Praveen.. that helps.