Profit Center Accounting

The profit center represents an operational area defined within an organization by

management for internal monitoring purposes. Profit centers display result for which
separate statements can be calculated based on cost-of-sales accounting and period
accounting.

Profit Center Accounting

•A ProfitCenter is not an independent account assignment object at the moment of
entering a transaction in SD or MM - it is derived from existing objects

•As a default, revenue and costs for Profit Centers are derived as follows:
–Sales order line item based on the product being sold
–Direct costs based on the assignment of production orders and direct costs. The system
proposes the Profit Center based on the Profit Center of the material being produced.
–Overhead costs based on the assignment of the Cost Center or other cost object

–Full line-item detail (GL Account level)

–Profit Center : default value = combination of product line and plant
–Allows for standard and alternative views of the Profit Center Hierarchy
Profit Centers represent an independant Business Unit within a Company
where we want to monitor Operational Results.

Profit Centers capture Costs and Revenue.

PCA allows calculation of Net Income at Profit Center level

A link to the “Standard” Hierarchy is required. An unlimited number of

alternative user-defined hierarchies can exist.

Profit Centers are effective dated.

Any SAP object related with Profit, must be assigned to a Profit Center: Cost
Centers and Orders (CO), Materials (MM), Projects (PS), Assets (AM),
Production Orders (PP)
uction Orders (PP)
• Cost Objects are assigned to Profit Centers.

• Any Activity in a Cost Object is posted automatically into the Profit Center
(Budgets, Actuals, Allocations,...)

Profit Center Accounting Planning

Planning can be done:
–Directly to the Profit Center
–By rolling up Planned data from assigned
Cost Centers, Orders or Projects
Planning of:
–Revenues / Expenses
–Activities
–Statistical Values
Multiple Planning Versions
Fixed/ Variable Costs

Simulation / Revaluation. Copy Functionality

Planning in Foreign Currency
Audit Trail On Planning Changes
Allocations
Flexible Reporting with Drill-Down

Maintain Profit Center

Controlling>Profit Center Accounting>Basic Settings>Controlling Area
Settings>Maintain Controlling Area Settings

Dummy Profit Center : The fileld grayed out. The dummy profit center is the
default profit center for the controlling area. It will capture all posting that do not
have a profit center account assignment. Additionally , the dummy will server as
the default for assignment on the cost center master record if one is not manually
assigned An entry can be made into the field from that menu path.The
assignment is made when the master record is created. As special transaction is
used to create the dummy profit center. There can only be one dummy profit
center per controlling area.

Creat dummy profit center

Controlling>Profit Center Accounting> Master Data> Profit Center> Create
Dummy Profit Center

ANALYZE SETTING
Controlling>Profit Center Accounting>Basic Settings>Controlling Area Settings>
Analyze Settings

Business Process
1. The Enterprise decides to transfer CO plan data to PCA.
It is possible to transfer plan data real time from cost centers and internal orders to Profit Center Accounting for each
activity. The system reflects every planning activity in Cost Center Accounting and Internal Orders immediately in Profit
Center Accounting.
Menu path : Accounting>Enterprise controlling>Profit center accounting>Planning>Plan data transfer>CO plan data
T/code : 1KE0

2. Monitoring Profit Center Accounting assignments

The assignment monitor provides you with an overview of all the assignments you have made to profit centers and
supports you when you make or change assignments. For example, you can call up a list of cost centers which have not
been assigned to a profit center or those cost centers which are assigned to a particular profit center or profit center
group.

Incorrect assignments lead to incorrect transaction data in Profit Center Accounting, which usually can only be corrected
with greater difficulty. You should therefore check your assignments carefully.
Menu PATH : Accounting>Enterprise controlling>Profit center accounting>Master Data>Assignment Monitor
T/CODE :1KE4

3. The Enterprise decides to transfer CO statistical key figures to PCA

There can be a number of reasons why you might want to plan statistical key figures. For example, you may want to use
them as a tracing factor for distributing or assessing data between profit centers, or you may want to calculate other key
figures with them in the information system. In addition to planning statistical key figures manually for your profit centers,
you can also transfer key figures from Cost Center Accounting, including those transferred there from the Logistics
Information System (LIS). These key figures can be transferred in real time or subsequently in regular intervals.

Menu path : Accounting>Enterprise controlling>Profit center accounting>Planning>Plan data transfer>Statistical key figures
T/code : 1KEE

4. The Enterprise needs to view any changes to profit center master data.
The Enterprise contains Profit Centers at the lowest organizational unit that requires a full Income Statement. All actual
and plan revenues are managed at the Profit Center level. Actual and plan costs are managed at the Cost Center level,
and, through the assignment of one or many Cost Centers to a Profit Center, an income statement can be produced.
Menu path : Accounting>Enterprise controlling>Profit center accounting>Master data>Profit center > Individual Processing >
Display Changes
T/code :6KEA