Effects in SD- If profit center blocked

[Former Member]

Dear Gurus,

If Finance people block one profit center, what are the effects will be happeen in SD.

Cheers,

Sumith

Edited by: Sumith H on Jul 29, 2008 7:22 AM

[Former Member]

Hi,

- Profit Center is particular division,branch/product line for which you want to find out the financial result.

Profitability Analysis allows Management the ability to review information with respect to the companyu2019s profit or contribution margin by business segment. Profitability Analysis can be obtained by the following methods:

- Account-Based Analysis which uses an account-based valuation approach. In this analysis, cost and revenue element accounts are used. These accounts can be reconciled with FI (Financial Accounting).

- Cost-Based Analysis uses a costing based valuation approach as defined by the User.

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.

Hope, Its Helpful.

Best regards,

Amit.

[former_member183879]

Profit center is determined in the sales order based on various configurations.

1. Assignment of profit centre at the material master level. In this case, the profit center will appear in the sales order document level itself. If PC is blocked, then the profit center will not come at the line item level in the sales org.

2. All other elements are related to FI (Linking GL account to PC, linking Cost element to PC , etc) and hence they will effect only after invoice creation in FI. In these cases also if a PC is blocked, then the values will not be posted/accrued in the profit center.

Hope this helps you. You can reward if it had helped you