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 Profit Center

Definition

Profit center is an organizational unit in the Accounting component in the R/3 System. It reflects a management-oriented structure of the enterprise for the purposes of internal control.

Use

Use profit centers to portray the following:

  • Units of the enterprise that bear responsibility for their own results, for example, product areas
  • Corporate strategies, for example:
    • "Clearing up product line"
    • Comparing regional/geographic units of the enterprise
    • "Make or buy"
    • Where to manufacture

Profit center managers should be able to influence the costs and revenue for which they are responsible.

You do not need to record direct costs, overhead costs and revenue separately. They are entered automatically.

Integration

For more information, see:

Profit Center: Integration (Organizational Unit)