Cost Center & Profit Center in SAP

April 5, 2009 by mySAP
Filed under: General Ledger Module

What is Cost Center& Profit Center in SAP?

Cost Center in SAP is an organisational unit within a company that is used to track where costs occurred within the Organisation (i.e., as a cost collector)

Cost Center hierarchy needs to be defined in the SAP system
The hierarchy represents cost Organisation structure of the company
If Profit Center is implemented in the system, the Cost Center is assigned to the Profit center. Many cost centers can be assigned to the same profit center.
Part of Cost Controlling (CO) – Overhead Management

Profit Center provides information to measure the profitability within the Organisation.

Record cost/expense (from the Cost Center or any other cost object as internal order, etc), revenue, and B/S items
Profit Center structure/hierarchy is defined based on the company Organisation structure
Profit Center can go across company codes
Part of Cost Controlling (CO) – Profit Centre Accounting (SAP Classic GL) or part of General Ledger (SAP New GL)

Note: Define Segment so that you can enter an associated segment in the master record of a profit Center. The segment is then derived from the assigned Profit Center during posting within SAP New GL.