Cost Center and Profit Center

Cost Center

An organizational unit within a controlling area that represents a defined location of cost incurrence. The requirement at Greaves is to capture the costs Department wise. Cost centers would be divided into main groupings:

  1. Production
  2. Service
  3. Administration Cost Centers
  4. Selling & Distribution Cost Centers

Profit center

Profit Centre can be created using KE51, changed with  KE52 and displayed with KE53.
A profit center is an organizational unit in accounting that reflects a management-oriented structure of the organization for the purpose of internal control. We can analyze operating results for profit centers using either the cost-of-sales or the period accounting approach. By calculating the fixed capital as well, we can use our profit centers as investment centers.