profit center

[Former Member]

hi all,

1) i need to know if profit center is considered as internal company in a company which itself can create revenue within a company?

2) why cost center is a cost object and profit center is not a cost object? whether revenue or expense also go to profit center. so why is it that profit center not a cost object?

thanks

[Former Member · Accepted solution]

Hi,

Cost centres are assigned to Profit centre. Also materials are assigned to profit centre. As a result, cost centre assests get cumulated to profit centre. Also material movements and sales (again through material) get aggregated at profit centre.

This could be the reason.

Regards

Murali

[Former Member · Accepted solution]

hi,

thanks for the information.

1) materials are assigned to profit center. what has it got to do with cost center asset?

2) material and cost center are assigned to the same profit center? if yes, then both material and cost center are parrallel. so why cost center asset accumulated due to material?

really hope can have advice.

Thanks

[Former Member]

Hi,

Normally you only assign costs to cost centers. Each G/L cost account is defined as cost element. When you post to nsuch accouny, systew ill ask you for a CO object (could also be an internal order or a WBS element that will be settled later on to a cost center).

Cost centers are linkned to profit centers, meaning that cost assigned to a cost center will also be assigned to its profit center.

Next to costs via cost center, you can also assign revenue to profit centers (by assignning materials / sales orders to pfoit centers).

You can also transfer B/S items to profit centers, e.g. assets and WIP.

Regards,

Math

[Former Member]

Hi,

You need not mix-up material being assigned to profit centre with cost centre being assigned. The fact that cost centre is assigned to profit centre enables the system to aggregate activities of all assigned cost centres to profit centre.

Like-wise, since materials are assigned to profit centre, Goods issue etc. related to material also get aggregated to profit centre.

Hope it clarifies the issue.

murali

[Former Member]

This message was moderated.

[Former Member]

hi,

i do not really understand. appreciate if you can reply in point form.

thanks alot