Cost Centers

[Former Member]

Hi,

What is a Cost Center?What is the purpose of it in Sales Orders and how to assign cost centers to sales orders?

Can somebody give me reply in detail please?

Regards,

Ajit

[Former Member · Accepted solution]

hi,

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.

Some of the benefits of Cost Center Accounting : (1) Managers can set Budget /Cost Center targets; (2) Cost Center visibility of functional departments/areas of your business; (3) Planning ; (4) Availability of Cost allocation methods; and (5) Assessments/Distribution of costs to other cost objects.

The Cost Center Determination settings is in OVF3- but there are some cases where the Cost Center must be exceptionally changed.

If the document category for order type in IMG VOV8 is defined to be "I" which belong to order type FD - Deliv.Free of Charge, then the field cost center is active for input during transaction VA01.

Alternatively, you can specify an order reason and assign a cost center to an order reason.

However the standard SAP works only at the header level though, so it would not work if cost center is needed on the line item.

The cost center are assign for such business transactions as :

- Free deliveries

- Returns

- Deliveries of advertising materials

You can also make cost center allocation dependent on the order reason, for example:

Order reason: Damage in transit

Order reason: Free sample

Both the IMG settings are done in transaction OVF3, either with/without the order reason.

regards

sadhu kishore

[Lakshmipathi]

Dear Ajit

For information, in sale order, you wont see Cost Center but you will see Profit Center.

Definition of Cost Center is a Unit within the organization in which the manager is responsible only for costs. A cost center has no control over sales or over the generating of revenue. An example is the production department of a manufacturing company. The performance of a cost center is measured by comparing actual costs with budgeted costs for a specified period of time.

thanks

G. Lakshmipathi

[Former Member]

Hi,

Thanks for the prompt reply.

Is there no relation between cost center and sales?

Regards,

Ajit

[Former Member]

just one example:

you assign a jurisdiction code to a cost center to allow automatic sales and use tax calculation