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Practical Guide to SAP CO-PC (Product Cost Controlling)

Because of its complex integration, Product Cost Controlling (CO-PC) is often regarded as the most challenging module in SAP ERP. In this book, you will learn the most important concepts, business processes, and configuration settings. By concentrating on...



  • Acknowledgments
  • Preface
  • 1 Introduction to Product Costing
  • 2 Product Cost Planning
  • 3 Material Masters
  • 4 Costing Run Execution
  • 5 Actual Costs & Month-End Processes
  • 6 Closing Words
  • A About the Author
  • B Disclaimer
  • C Credits

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Tanya Duncan






2.1 Profit centers

Profit centers represent an organizational unit in the accounting and controlling modules in SAP. They reflect a management-oriented structure of the enterprise for the purpose of internal control. Both expense and revenue postings require a profit center in order to build a profitability view by profit center. Profit centers are created for revenue generating areas such as product lines, divisions, regions, or functions.

Profit center postings are generated in parallel to postings made in the controlling module and the results are reviewed in a separate ledger. The configuration for activating profit center accounting can be accessed through transaction OKKP or through the IMG menu path ControllingGeneral ControllingOrganizationMaintain Controlling Area.

Profit centers are assigned to balance sheet items like assets, payables, receivables, and inventory. Profit centers are also assigned to material masters and cost centers in order to derive a profit center on each posting.

Profit centers are created in transaction KE51. They are specific to a controlling area and are extended to relevant company codes in the company code tab. You can also assign profit centers to company codes in mass using transaction KE56 (see Figure 2.1).

Product Costing

Figure 2.1: Display profit center

A dummy profit center ‘999’ should be created in each company code. The dummy profit center is used as a default profit center when a profit center cannot be determined. The balance in this profit center should be reviewed at month-end and year-end to move any costs that are not assigned properly. Dummy profit centers are created in transaction KE59 and the dummy profit center indicator is automatically set on the indicators tab.

Partner profit center is important in profit center consolidations where costs and revenues result from inter or intracompany transactions. Partner profit center is configured to show the sender and receiver relationship between costs. It can be used in postings resulting from cost allocations or purchases where costs are moved from one profit center to another.

Partner profit centers can be derived from the supplying object if the sender is in the same SAP version. Derivation rules can also be configured if the supplier is not in the same SAP version using vendor, customer, material, company, etc.

Profit center analysis period tip

When creating a profit center, ensure that the analysis period date range matches the date range of cost centers. If a profit center is created with a smaller date range than that of a cost center, you will receive an error when you try to assign the profit center to a cost center.

The person responsible and profit center group are required fields. You can assign profit centers to company codes on the company code tab. The address and communication tabs are optional and provide fields for indicating contact information for a profit center owner.

Activate profit center warning!

After you save a newly created or changed profit center, note that the status on the basic data tab is inactive. You must click the matchstick button to activate the new profit center after you make modifications.

2.1.1 Profit center hierarchy

A profit center hierarchy is required for each controlling area. Within a profit center hierarchy, you create profit center groups to combine like profit centers for reporting and profit center allocations (if applicable). Typically hierarchy requirements for grouping profit centers come from executive leadership.

Profit center group example

You may want to group together profit centers that are produced using a certain type of product, or multiple profit centers that represent a division of the company. P&G, for example, may group health products in one profit center group separate from home cleaning products.

You can build your hierarchy many levels deep to achieve the level of reporting desired. The profit center group you assign in the profit center master data is the lowest level group above the profit center. The profit center hierarchy can be changed or displayed in transaction KCH6N (see Figure 2.2).

Product Costing

Figure 2.2: Display profit center hierarchy

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