SAP CO - Cost Center
A Cost Center is defined as a component in an organization that adds to the cost and indirectly adds to the profit of the organization. Examples include Marketing and Customer Service.
A company can classify a business unit in three ways −
- Profit center,
- Cost center, or
- Investment center.
The simple and straightforward division in an organization can be classified as cost center because cost is easy to measure.
Cost Center Hierarchy
The hierarchy of a cost center looks as follows −