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Profit Center derivation in different scenarios

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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      65 Comments
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      Author's profile photo Murali Babu Nallamothu
      Murali Babu Nallamothu

      Hi Kavita / Ajay,

      Thanks for the valuable information.

      Rgds

      MBN

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      Thanks Murali.

      Regards,

      Kavita

      Author's profile photo Former Member
      Former Member

      Nice Kavita

      Author's profile photo Sanil Bhandari
      Sanil Bhandari

      A very simple and easy to understand, most useful document

      Regards

      Sanil

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      Thanks Sanil. Appreciate your comments.

      Regards,

      Kavita

      Author's profile photo Ravi Sankar Venna
      Ravi Sankar Venna

      Good work Kavita. Keep it up.

      Kind Regards,

      Ravi

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      Thanks Ravi.

      Regards,

      Kavita

      Author's profile photo Former Member
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      thks kavitha. very easy to understand your documents which is very complicated topic to me.

      Regards,

      Suresh Paramasivam

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      Thanks Suresh..I am glad it helped you..:-)

      Regards,

      Kavita

      Author's profile photo Mariks .
      Mariks .

      Very good document..thanks for sharing ....

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      Thanks Mariks. Appreciate your comments.

      Regards,

      Kavita

      Author's profile photo Mohammed Kalim
      Mohammed Kalim

      Nice work Kavita. Thanks for sharing...

      Regards,

      Kalim

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      Hi,

      Thanks Mohammed.

      Regards,

      kavita

      Author's profile photo Erwin Leitner
      Erwin Leitner

      Hello,

      Thank you very much.

      Excellent

      br erwin

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      Thanks Erwin,

      I am glad you liked it.

      Regards,

      Kavita

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      Thanks Siva. Thanks for the comments.

      Regards,

      Kavita

      Author's profile photo v s
      v s

      Dear Kavita,

      It is really valuable document.

      Regards,

      Vinay

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      Hi Vinay,

      Thanks.

      Regards,

      Kavita

      Author's profile photo Former Member
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      Kavita,

      thanks, very concise and extremely helpful document.

      Thanx,

      Aziz

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      Hi Aziz,

      Thanks. Appreciate your comments.

      Regards,

      Kavita

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      Hi Kavitha,

      Good effort thanks for the share it helps a lot for freshers.

      Thanks,

      Lakshmi

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      Thanks a lot. Good work.

      Regards,

      Vamsidhar.K

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      Thanks Lakshmi & Vamsidhar.

      I am glad to know it helped you.

      Regards,

      Kavita

      Author's profile photo Lakshmi Sama
      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

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      Thanks Lakshmi S. Hope it is useful for you.

      And sure I will come with more contributions soon 🙂

      Regards,

      Kavita

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      Former Member

      Good Document Kavita, Thanks for sharing.

      Author's profile photo Former Member
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      Thanks Satish.

      Regards,

      Kavita

      Author's profile photo Former Member
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      Hi Kavita

      Thank you Kavitha

      Very simple way given conceptual knowledge

      Author's profile photo Former Member
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      Thnaks Ghurappa,

      Glad you liked it. Appreciate your comments 🙂

      Regards,

      Kavita

      Author's profile photo Syed Zia Abbas
      Syed Zia Abbas

      Dear Kavita

      Appreciate you effort.Keep up the good work. ... 🙂

      regards

      Syed Zia Abbas

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      Thanks Syed.

      Author's profile photo Former Member
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      Hi Madam,

      Very nice document. Thanks for sharing.

      Regards,

      Gangadhar

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      Thanks Gangadhar for your comments. 🙂

      Regards,

      Kavita

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      Thanks for sharing your knowledge to us.

      Regards

      Nagendra

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      Thanks Nagendra..

      Regards,

      Kavita

      Author's profile photo Sachin Thombre
      Sachin Thombre

      Good Doc. Thanks for your efforts.

      Author's profile photo Former Member
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      Thanks Sachin for the comments and the shining stars 🙂

      Author's profile photo Former Member
      Former Member

      Very Good friends...to share a valueble documents

      Author's profile photo Former Member
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      Blog Post Author

      Thanks Vasu..Glad u liked it

      Regards,

      kavita

      Author's profile photo Former Member
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      Great one, thanks a lot

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      Thanks Abdullah..

      Regards,

      Kavita

      Author's profile photo Sree Kumar Nair
      Sree Kumar Nair

      Good article. Appreciate it (y)

      Author's profile photo Former Member
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      Thanks Sree,

      Regards,

      Kavita

      Author's profile photo Arvind Pereira
      Arvind Pereira

      Hi Kavita,

      Way to go:- "top liked content on SCN for the month"

      thanks

      Arvind Leo Pereira

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      Thanks Arvind,

      Regards,

      Kavita

      Author's profile photo Former Member
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      Perect collection! Thanks

      Author's profile photo Former Member
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      Thanks..

      Author's profile photo Former Member
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      Dear Kavita,

      Useful documents. Thanks for sharing the doc.

      Regards,
      Satya

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      Thanks Satya.. Appreciate your comments..

      Regards,

      kavita

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      Hi Kavita,

      Thank you for the useful information.

      Regards,

      Vivek.

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      Thanks Vivek.

      Regards,

      Kavita

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      Thanks Kavitha, with this reliable understanding/ information - we are progressing

      Amazing

      Thank you Ajay

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      Thanks!!

      Author's profile photo pk pradhan
      pk pradhan

      Hi Kavita,

      Thanks for sharing such a wonderful document.

      Expect more from u in future...... 🙂

      Regards,

      PK

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      Thanks PK!! Sure, I will come up with some more contribution soon.

      Author's profile photo Rohit raj
      Rohit raj

      Hi Kavita,

      superb document. Its very informative for the Beginners like me to understands the PC functionality.

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      Hi Rohit,

      I am glad, it helped you!!

      Regards,

      Kavita

      Author's profile photo Bharathkumar Nallamalli
      Bharathkumar Nallamalli

      Really nice document. Thanks very much for sharing.

      Author's profile photo Former Member
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      Thanks Bharath!!

      Author's profile photo Manohar Gowri Shankar
      Manohar Gowri Shankar

      Hi Kavitha,

      I am not able to fin the document shared by you

      Author's profile photo Former Member
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      Hi Manohar,

       

      The article can be seen here.. What problem are you facing?

       

      Regards,

      Kavita

       

      Author's profile photo Mohd Shazaly A J
      Mohd Shazaly A J

      Really useful.

      Keep up the good work ?
       

      Author's profile photo Former Member
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      Thanks Mohd. I am glad you liked it.

      Regards,

       

      Kavita

       

      Author's profile photo Jiaming Zang
      Jiaming Zang

      Thank you for your meaningful blog, it solved my issue.

      Author's profile photo Chen Feng
      Chen Feng

      Dear colleague,

      Could the substitution for profit center in sales order works in Cloud Version?

      Currently, I don't find the necessary SSCUI.

      Many thanks,

      Chen