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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

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64 Comments

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  1. Lakshmi Sama

    Hello Kavita,

    Thanks alot for sharing such a wonderful information. Content is so simple and understandable very easily. Expecting more contributions from your end 🙂

    Regards,

    Lakshmi S

    (0) 

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