Why A Profit Center is Required?
The Primary objective of Profit Center is to represent an independent organizational subunit that operates practically independently in the market, bears responsibility for it’s own costs and revenue , and can be expanded to become an investment center or can be treated as a Company within a company.The Profit center approach embodies the increasing re-establishment between internal and external accounting, functioning as a connecting link between two Accounting concepts.
Profit Center Accounting helps in answering the following questions :
- How much is the revenue?
- How much is the cost of goods manufactured?
- How much is the contribution margin?
- How much is the administrative and sales costs?
- How much is the operating profit?
ROI , EVA and cash flow analyses are possible at profit center level.
Create Profit Center
Step 1) Enter Transaction code KE51 in the SAP Command Field
Step 2) In the next screen , Enter the controlling area in which the Profit Center is to be created
Step 3) In the next screen, Enter a unique Id for the Profit Center
Step 4) In the next screen, Enter the Following
- Enter the name of the profit center
- Enter a short description of the profit center
- Enter the person responsible for the profit center
- Enter the profit center group for which the profit center belongs to.
Step 5) Press ‘Save’ button , for saving the profit center from the SAP Standard Toolbar
The Profit is saved in the inactive mode
Step 6) Press the ‘Activation’ Button for the activation of the profit center from the Application Toolbar
Step 7) Check the Status bar for the status of creation of profit center.
Profit Center Group
Step 1) Enter Transaction Code KCH1 in the SAP Command Field
Step 2) In the next screen , Enter the Controlling area in which the profit center group is to be created
Step 3) In the next screen, Enter a unique Id for the Profit center group to be created
Step 4) In the next screen, Enter a short description for the Profit center group
Step 5) Press ‘Save’ button , from the SAP Standard Toolbar to create the profit center group
Step 6) Check the Statusbar for the creation of the profit center group
Profit Center Posting
Posting to Profit Center Via Financial Document (FI Interface)
Step 1) Enter Transaction code FB50 in the SAP Command Field
Step 2) In the next screen , Enter the following header data
- Enter Document Date
- Enter Company code
Step 3) Enter the Following Line Item Data
- Enter Debit G/L Account
- Select Debit
- Enter Debit Amount
- Enter Credit G/L Account
- Select Credit
- Enter Credit Amount
Step 4) After Enter the Line items ,
- Select the Debit Line Item
- Press Choose Detail button
Step 5) In the next detail line item screen, Enter the Profit Center
Step 6) Press ‘Save’ button from SAP standard toolbar to post the document
Step 7) Check the status bar for the Document number for the confirmation of posting
Profit Center Planning
Planning Process is not a one-time activity, but rather an iterative process, which is usually performed in several steps.Profit center planning is an integral part of your overall company planning. The integral character of business planning is particularly apparent within the context of Profit Center Accounting, as the planning data used here is largely created in other applications (such as Cost Center Accounting) and can be supplemented or changed in Profit Center Accounting. Profit center planning is part of shortterm business planning and thus encompasses a span of one fiscal year. During the profit center planning process, Individual planning areas are combined into an integrated planning network. We can use various plan versions in order to depict various planning Profit center planning offers us the following methods of planning:
- Copying existing plan or actual data to a plan
- Posting plan data by period or simultaneously by transaction from other applications
- Manual planning of profit centers
- Distribution and Assessment of data between profit centers
- Various plan reports for comparison of different plan versions
SAP Profit Center tcodes
|PROF||Profit center Accounting Enterprice Controlling|
|KE5Z||Profit center: Actual Line Items Enterprice Controlling|
|9KE0||Create profit center Document Enterprice Controlling|
|3KEI||Derive Default profit center Enterprice Controlling|
|KE51||Create profit center Enterprice Controlling|
|KE52||Change profit center Enterprice Controlling|
|KE53||Display profit center Enterprice Controlling|
|2KES||Profit center: Balance carr’d forw. Enterprice Controlling|
|KCH3||Display profit center hierarchy Enterprice Controlling|
|2KEE||Profit center: Totals Records Enterprice Controlling|
|S_AC0_52000888||Payables: profit center FI|
|KCH2||Change profit center hierarchy Enterprice Controlling|
|KCH1||Create profit center Group Enterprice Controlling|
|KE54||Delete profit centers Enterprice Controlling|