MM

[Former Member]

Dear all

what is the difference between cost center and profit center

[Former Member · Accepted solution]

Dear,

Cost Center Accounting 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.

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,

Syed Hussain.

[Former Member]

Hi

Cost centre is to book Expences

Profit centres is for revenues.

In general Costing is the expense incured by the company. and Profit is revenue to the company. The cost incured more of you plan will be to the loss account and the cost incured less than plan will go the profit account.

All the PL are FI function and depends on the Primary cost element. GL code assgined and chart account will be different from the CO function which depends on the secondary cost element drived from the primary cost element and chart accounts also will different for this.

Regards,

Vijay

[srinivasa_maruvada]

Hi

Functionally Cost centre is where costs are incurred and profit centre is where profit is derived (Revenue less Cost). In CC we post only costs or revenues where as in PC we post both cost and revenue. Check TCode KS01 - Create for CC and TCode KE51 - Create for PC

Cheers

Srinivas