A profit center (PC) is a sub-division within the organization responsible for its own revenues, expenses, assets and the ROI (return on investment). Profit centers can be considered as “companies with in the company”
It is a mystery to many how the profit center is determined in various postings. Without understanding this, it is not possible to define a sound SAP enterprise structure. For example, Company ABC wants to decide at what level the Profit Centers must be defined. The knowledge about the profit center determination will help you judge whether the decision taken is tenable or not
Here, we will discuss Profit center determination in various postings that happen natively in FI module or triggered from Logistics module i.e. MM, PP and SD modules.
At the end of the document, you will appreciate the (Crisp) logic used in SAP to determine the Profit center in various important scenarios.
Profit Center determination in native FI Postings: -
Case |
PC derived from |
GL Account is a cost element |
> CO object |
GL Account is not a cost element (P&L account and B/S Account) |
> FI substitution
> Default assignments (FAGL3KEH)
> Manual entry
|
GL Account is a B/S account – document splitting active |
> Off setting line item / Constant
> FI substitution
> Default assignments (FAGL3KEH)
> Manual entry
|
Asset transactions |
> CO object specified in the asset master
> Starting EhP5, PC can be specified in the asset master directly
|
Profit Center determination in MM Postings: -
In the case of MM postings, the Profit center is first determined in the parent document, i.e., Purchase order, and it flows from there into subsequent postings.
Case |
PC derived from |
Stock receipt (GR)
(Dr) Stock Account
(Cr) GR/IR Account |
Purchase Order (PO derives from Material master) |
Stock receipt - account assigned PO
(Dr) Consumption Account
(Cr) GR/IR Account |
CO object (in the Purchase Order) |
Consumption/Scrapping
(Dr) Consumption/Scrap account
(Cr) Stock Account |
CO object
Material master (of mat consumed) |
Consumption/Scrapping
(Dr) Consumption/Scrap account(not CE)
(Cr) Stock Account |
Material master (of mat consumed)
Material master (of mat consumed) |
Profit Center determination in PP Postings: -
In the case of PP postings, the Profit center is first determined in the parent document, i.e., Production order, and it flows from there into subsequent postings.
Case |
PC derived from |
Production order – MTS Scenario |
Material master (of the product manufactured) |
Production order – assigned to Project or Sales order item |
Project / Sales order item |
Consumption
(Dr) Consumption
(Cr) Stock Account |
Production order
Material master (of mat consumed) |
Stock receipt – MTS Scenario
(Dr) Stock Account
(Cr) COGM |
Material master (of the product mfd )
Production order |
Stock receipt – MTO Scenario
(Dr) Stock Account
(Cr) COGM |
PC from Project / Sales order item
Production order |
Profit Center determination in SD Postings: -
In the case of SD postings, the Profit center is first determined in the parent document, i.e., Sales order, and it flows from there into subsequent postings.
Case |
PC derived from |
Sales order |
PCA Substitution OR Material master |
Sales order – account assigned to WBSE/Order |
CO object |
PGI (Delivery)
(Dr) COGS Account (not CE)
(Cr) Stock Account |
Sales order
Material master |
PGI (Delivery) – MTO scenario
(Dr) COGS Account (cost element)
(Cr) Stock Account |
WBS / Order / Sales order
Material master |
Billing
(Dr) Customer
(Cr) Revenue |
Sales order
Sales order |
Stock Transfer (Intra-Company)
(Dr) Stock Account
(Cr) Stock Account |
Material master (receiving plant)
Material master (sending plant) |
Hope you enjoyed reading the document and it served its purpose. Do share your feedback / comments at the end of the document after reading the same!!!
Thanks,
Kavita Agarwal
