SAP CO - Profit Center
SAP CO Profit Center is used for managing internal controlling. When you divide your company into profit centers, it allows you to delegate responsibility to decentralized units and treat them as separate companies in a company. It also allows you to calculate key figures in cost accounting like ROI, Cash flow, etc.
Profit Center is a part of Enterprise Controlling module and is integrated with a new General Ledger Accounting.
Key Features of SAP CO Profit Center
Profit Center Accounting is used to determine profit for internal areas of responsibility. It lets you determine profits and losses using either period accounting or the cost-of-sales approach.
It allows you to analyze fixed assets by profit center, thus using them as investment centers. It allows to expand profit centers to investment centers.
Why Do We Create Profit Center?
The main aim of creating a Profit Center in SAP CO is to analyze the cost of a product line or a business unit.
You can also generate P&L accounts according to a Profit Center and also generate balance sheets, however a Profit Center should only be used for internal reporting purpose.
The key components of a profit center include – name of the profit center, the controlling area under which it is assigned, time period, person responsible for the profit center, standard hierarchy, etc.
How to Create a Profit Center?
Use the T-code KE51 or go to Accounting → Controlling → Profit Center Accounting → Master Data → Profit Center → Individual Processing → Create.
In the next screen, enter the controlling area in which the profit center is to be created and click the tick mark.
In the next screen, enter the unique profit center ID and click Master Data.
A new window will open where you need to input the following details −
- Profit center name and a short description of the profit center.
- Person responsible for the profit center.
- Profit center group for which the profit center belongs to.
Click the Save icon at the top to create the profit center in inactive mode. To activate the profit center, click the icon as shown in the following screenshot.
How to Create a Profit Center Group?
Use the T-code KCH1 or go to Accounting → Controlling → Profit Center Accounting → Master Data → Profit Center Group → Create.
Enter the Controlling Area in which the Profit Center is to be created.
Enter the Unique Profit Center Group Id as shown below and press Enter.
Enter the short description for the profit center group and click the Save icon at the top.