Profit Center Q&A

Profit Center

What is the basic purpose of creating a Profit Center?

The basic purpose of creating a Profit Center is to analyse the revenues

and costs for a particular product line, or a plant or a business unit.

Though you can generate balance sheets and profit and loss accounts

per Profit Center still a profit center should basically be used as a tool

only for internal reporting purposes.

If legally one has to produce the Balance sheets and Profit and Loss

Accounts for a profit center then it is advisable to create it as a company

code instead of a profit center

How does the cost and revenue flow to the Profit Center?

The profit center is stored in the cost center this way the costs flow to the

profit center.

The profit center is also stored in material master. This way all sales

orders created for the finished product automatically picks up the profit

center from the material master and all the revenues and costs coming

from this sales order for that finished product is passed on to this profit

center.

A profit center document is created in addition to the Finance document

whenever revenue or consumption takes place. This document contains

the details of the profit center.

Once both the costs and revenues flow to the profit center you can write

reports using the Report Painter to get intelligent analysis. You can also

use SAP standard reports

Statistical key figures are created in the cost center accounting

module. Now the same statistical key figures are required in the

profit center accounting module. Is it required to maintain the

statistical key figure in PCA module?

No. Since the statistical key figures are created in a controlling area.

Profit center is a sub module within controlling area. The statistical key

figure is created for the controlling area and as such is available in profit

center accounting module.

What are the precautions to be taken while maintaining the 3KEH

table for profit center accounting?

You should not maintain the customer and vendor reconciliation

accounts in the 3KEH table. Further you should also not maintain the

special GL accounts in this table. Since we are transferring the customer

and vendor balances to profit center module through separate month end

programs. If the reconciliation’s accounts are maintained here it will

result in double posting in the profit center module.

Should secondary cost elements be maintained in the 3KEH table?

No. Since here we maintain only those accounts for which the value

should flow from FI to PCA. Secondary cost elements are already defined

in the controlling module which will reflect in the postings in PCA also

How can the default settings be maintained for cost elements per

company code?

The default settings can be maintained in transaction OKB9. Here we

can specify for a company code, cost element which is the cost center to

be defaulted or whether profitability segment is to be automatically

derived. Further we can also maintain whether business area is

mandatory or profit center is mandatory and can maintain the default

business areas and profit centers.

What are the other important activities in Profit Center?

The assignments of profit center to the cost center and also assignment

of profit center to the material master is what will determine the success

of the Profit center posting. If these assignments are wrongly done then

the profit center postings will not come in properly.