Profit Center derivation in different scenarios | SCN Page 1 of 8

Getting Started Newsletters Store

Hi, Guest Log On Join Us Search the Community

Products Services & Support About SCN Downloads

Activity Communications Actions
Industries Training & Education Partnership Developer Center

Lines of Business University Alliances Events & Webinars Innovation Browse

Version 3
Profit Center derivation in different
scenarios
created by Kavita Agarwal on Sep 8, 2014 11:53 AM, last modified by Kavita Agarwal on Sep 24, 2014 12:15 PM

Share 1 0 Tweet
Like 3

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 > FI substitution

B/S Account) > Default assignments (FAGL3KEH)
> Manual entry

GL Account is a B/S account document splitting > Off setting line item / Constant
active > 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) Purchase Order (PO derives from Material master)
(Dr) Stock Account
(Cr) GR/IR Account

Stock receipt - account assigned PO CO object (in the Purchase Order)

(Dr) Consumption Account
(Cr) GR/IR Account

Consumption/Scrapping
CO object
(Dr) Consumption/Scrap account
Material master (of mat consumed)
(Cr) Stock Account

Consumption/Scrapping
Material master (of mat consumed)
(Dr) Consumption/Scrap account(not CE)
Material master (of mat consumed)
(Cr) Stock Account

http://scn.sap.com/docs/DOC-57931 19/08/2016
Profit Center derivation in different scenarios | SCN Page 2 of 8

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
Production order
(Dr) Consumption
Material master (of mat consumed)
(Cr) Stock Account

Stock receipt MTS Scenario

Material master (of the product mfd )
(Dr) Stock Account
Production order
(Cr) COGM

Stock receipt MTO Scenario

PC from Project / Sales order item
(Dr) Stock Account
Production order
(Cr) COGM

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)
Sales order
(Dr) COGS Account (not CE)
Material master
(Cr) Stock Account

PGI (Delivery) MTO scenario

WBS / Order / Sales order
(Dr) COGS Account (cost element)
Material master
(Cr) Stock Account

Billing
Sales order
(Dr) Customer
Sales order
(Cr) Revenue

Stock Transfer (Intra-Company)

Material master (receiving plant)
(Dr) Stock Account
Material master (sending plant)
(Cr) Stock Account

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

4760 Views

Average User Rating

(16 ratings)

Share 1 0 Tweet Like 3

56 Comments

Murali Babu Nallamothu Sep 9, 2014 7:16 AM

Hi Kavita / Ajay,

Thanks for the valuable information.

Rgds
MBN

Like (1)

http://scn.sap.com/docs/DOC-57931 19/08/2016
Profit Center derivation in different scenarios | SCN Page 3 of 8

Kavita Agarwal Sep 9, 2014 9:47 AM (in response to Murali Babu Nallamothu)

Thanks Murali.

Regards,

Kavita

Like (0)

BHASKAR K Aug 3, 2016 11:24 AM (in response to Kavita Agarwal)

Nice Kavita

Like (0)

Sanil Bhandari Sep 9, 2014 8:22 AM

A very simple and easy to understand, most useful document

Regards

Sanil

Like (1)

Kavita Agarwal Sep 9, 2014 9:49 AM (in response to Sanil Bhandari)

Thanks Sanil. Appreciate your comments.

Regards,

Kavita

Like (0)

Ravi Sankar Venna Sep 9, 2014 12:29 PM

Good work Kavita. Keep it up.

Kind Regards,
Ravi

Like (1)

Kavita Agarwal Sep 9, 2014 1:47 PM (in response to Ravi Sankar Venna)

Thanks Ravi.

Regards,

Kavita

Like (0)

Suresh Paramasivam Sep 9, 2014 3:13 PM

thks kavitha. very easy to understand your documents which is very complicated topic to me.

Regards,
Suresh Paramasivam

Like (1)

Kavita Agarwal Sep 10, 2014 7:21 AM (in response to Suresh Paramasivam)

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

Regards,

Kavita

Like (0)

Mariks . Sep 9, 2014 7:37 PM

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

Like (1)

Kavita Agarwal Sep 10, 2014 10:50 AM (in response to Mariks .)

Thanks Mariks. Appreciate your comments.

Regards,

Kavita

Like (0)

Siva Kumar Sukhavasi Sep 10, 2014 7:31 AM

A very simple and easy to understand, most useful document

Regards,
Sivakumar

http://scn.sap.com/docs/DOC-57931 19/08/2016
Profit Center derivation in different scenarios | SCN Page 4 of 8

Like (1)
Kavita Agarwal Sep 11, 2014 7:30 AM (in response to Siva Kumar Sukhavasi)

Thanks Siva. Thanks for the comments.

Regards,

Kavita

Like (0)

Mohammed Kalim Sep 10, 2014 3:47 PM

Nice work Kavita. Thanks for sharing...

Regards,
Kalim

Like (1)

Kavita Agarwal Sep 11, 2014 7:31 AM (in response to Mohammed Kalim)

Hi,

Thanks Mohammed.

Regards,

kavita

Like (0)

Erwin Leitner Sep 10, 2014 6:26 PM

Hello,

Thank you very much.

Excellent

br erwin

Like (1)

Kavita Agarwal Sep 11, 2014 7:32 AM (in response to Erwin Leitner)

Thanks Erwin,

I am glad you liked it.

Regards,

Kavita

Like (0)

v s Sep 13, 2014 11:57 AM

Dear Kavita,

It is really valuable document.

Regards,

Vinay

Like (1)

Kavita Agarwal Sep 15, 2014 7:59 AM (in response to v s)

Hi Vinay,

Thanks.

Regards,

Kavita

Like (0)

Aziz Dohadwala Sep 13, 2014 12:10 PM

Kavita,
thanks, very concise and extremely helpful document.

Thanx,
Aziz

Like (1)

Kavita Agarwal Sep 23, 2014 4:50 PM (in response to Aziz Dohadwala)

Hi Aziz,

Thanks. Appreciate your comments.

Regards,

Kavita

Like (1)

http://scn.sap.com/docs/DOC-57931 19/08/2016
Profit Center derivation in different scenarios | SCN Page 5 of 8

lakshmi p Sep 16, 2014 11:18 AM

Hi Kavitha,

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

Thanks,
Lakshmi

Like (1)

Vamsidhar Kaliki Sep 16, 2014 11:38 AM (in response to lakshmi p)

Thanks a lot. Good work.

Regards,

Vamsidhar.K

Like (1)

Kavita Agarwal Sep 23, 2014 4:52 PM (in response to lakshmi p)

Thanks Lakshmi & Vamsidhar.

I am glad to know it helped you.

Regards,

Kavita

Like (0)

Lakshmi Sama Sep 17, 2014 7:56 AM

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

Like (1)

Kavita Agarwal Sep 23, 2014 4:56 PM (in response to Lakshmi Sama)

Thanks Lakshmi S. Hope it is useful for you.

And sure I will come with more contributions soon :-)

Regards,

Kavita

Like (1)

Satish M Sep 19, 2014 12:34 PM

Good Document Kavita, Thanks for sharing.

Like (1)

Kavita Agarwal Sep 24, 2014 6:15 PM (in response to Satish M)

Thanks Satish.

Regards,

Kavita

Like (0)

Ghurappa Athirala Sep 23, 2014 4:42 PM

Hi Kavita

Thank you Kavitha

Very simple way given conceptual knowledge

Like (1)

Kavita Agarwal Sep 25, 2014 9:00 AM (in response to Ghurappa Athirala)

Thnaks Ghurappa,

Glad you liked it. Appreciate your comments :-)

Regards,

Kavita

Like (0)

Syed Zia Abbas Sep 24, 2014 12:29 PM

Dear Kavita

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

regards

Syed Zia Abbas

http://scn.sap.com/docs/DOC-57931 19/08/2016
Profit Center derivation in different scenarios | SCN Page 6 of 8

Like (1)
Kavita Agarwal Sep 25, 2014 9:00 AM (in response to Syed Zia Abbas)

Thanks Syed.

Like (1)

gangadhar reddy Sep 24, 2014 2:37 PM

Hi Madam,

Very nice document. Thanks for sharing.

Regards,
Gangadhar

Like (1)

Kavita Agarwal Sep 25, 2014 9:22 AM (in response to gangadhar reddy)

Thanks Gangadhar for your comments.

Regards,

Kavita

Like (1)

Nagendra Prasad Sep 25, 2014 8:49 PM

Thanks for sharing your knowledge to us.

Regards
Nagendra

Like (1)

Kavita Agarwal Oct 7, 2014 10:26 AM (in response to Nagendra Prasad)

Thanks Nagendra..

Regards,

Kavita

Like (0)

Sachin Thombre Sep 29, 2014 7:14 PM

Good Doc. Thanks for your efforts.

Like (1)

Kavita Agarwal Oct 9, 2014 11:43 AM (in response to Sachin Thombre)

Thanks Sachin for the comments and the shining stars :-)

Like (0)

VASU SREE Oct 1, 2014 5:11 AM

Very Good friends...to share a valueble documents

Like (1)

Kavita Agarwal Oct 9, 2014 11:44 AM (in response to VASU SREE)

Thanks Vasu..Glad u liked it

Regards,

kavita

Like (0)

Abdullah Galal Oct 1, 2014 11:42 AM

Great one, thanks a lot

Like (1)

Kavita Agarwal Oct 9, 2014 11:45 AM (in response to Abdullah Galal)

Thanks Abdullah..

Regards,

Kavita

Like (0)

Sree Kumar Nair Oct 1, 2014 4:17 PM

Good article. Appreciate it (y)

Like (1)

http://scn.sap.com/docs/DOC-57931 19/08/2016
Profit Center derivation in different scenarios | SCN Page 7 of 8

Kavita Agarwal Oct 9, 2014 11:46 AM (in response to Sree Kumar Nair)

Thanks Sree,

Regards,

Kavita

Like (0)

Arvind Pereira Oct 4, 2014 11:08 AM

Hi Kavita,

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

thanks
Arvind Leo Pereira

Like (1)

Kavita Agarwal Oct 9, 2014 11:46 AM (in response to Arvind Pereira)

Thanks Arvind,

Regards,

Kavita

Like (0)

milk bike Oct 11, 2014 10:11 AM

Perect collection! Thanks

Like (1)

Kavita Agarwal Oct 15, 2014 2:24 PM (in response to milk bike)

Thanks..

Like (0)

Satya Yenumula Oct 21, 2014 10:36 AM (in response to Kavita Agarwal)

Dear Kavita,

Useful documents. Thanks for sharing the doc.

Regards,
Satya

Like (1)

Kavita Agarwal Nov 19, 2014 9:29 AM (in response to Satya Yenumula)

Thanks Satya.. Appreciate your comments..

Regards,

kavita

Like (0)

Vivek Kumar Sinha Oct 24, 2014 1:04 PM

Hi Kavita,

Thank you for the useful information.

Regards,
Vivek.

Like (1)

Kavita Agarwal Dec 3, 2014 11:16 AM (in response to Vivek Kumar Sinha)

Thanks Vivek.

Regards,

Kavita

Like (0)

LCTLFRVR01 HDP Jul 25, 2016 1:39 AM

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

Amazing

Thank you Ajay

Like (0)

pk pradhan Jul 25, 2016 7:34 AM

Hi Kavita,

http://scn.sap.com/docs/DOC-57931 19/08/2016
Profit Center derivation in different scenarios | SCN Page 8 of 8

Thanks for sharing such a wonderful document.

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

Regards,
PK
Like (0)

Rohit raj Jul 25, 2016 10:41 AM

Hi Kavita,

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

Like (0)

Bharathkumar Nallamalli Aug 2, 2016 5:57 PM

Really nice document. Thanks very much for sharing.

Like (0)

Site Index Contact Us SAP Help Portal

Follow SCN
Privacy Terms of Use Legal Disclosure Copyright

http://scn.sap.com/docs/DOC-57931 19/08/2016