Assignment of Cost Centers
The assignment of a cost center also implicitly assigns all the assets that belong to that cost center to the profit center (see Assignment of Assets).
If an asset is assigned to a profit center via an internal order, and this profit center is not the same as the one to which the cost center is assigned, the profit center to which the internal order is assigned is transferred to Profit Center Accounting.
In the application menu, you assign cost centers as follows:
● For classic Profit Center Accounting under Master Data → Current Settings → Assignment: Cost Center
● For new General Ledger Accounting, under General Ledger → Master Records → Profit Center → Current Settings → Assignment: Cost Center
For information on how to assign cost centers, see the Implementation Guide (IMG) for classic Profit Center Accounting or for new General Ledger Accounting, under Assignments to Profit Centers.
The following examples demonstrate how you can assign cost centers to profit centers:
● If you want to divide your company into profit centers geographically, you can generally assign the cost centers of one business site to the same profit center.
● If you want to divide your company into profit centers according to product groups, it may occur that a single production cost center performs activities for a number of product groups. You might want to assign these cost centers to one profit center (for example, “Production A”). If the cost center then performs activities for a production order, the system credits the profit center “Production A” as well as the cost center. Consequently, only the over-/underabsorption of the assigned cost centers remains in the profit center as a balance at the end of the period. You can then either settle this over-/underabsorption from the cost center (for example, to a profitability segment) or allocate it directly to the profit centers of the corresponding product groups in classic Profit Center Accounting or in new General Ledger Accounting.
● It is often not possible to assign administration cost centers directly to a profit center. You might, for example, assign them to a service profit center or an allocation profit center. This profit center would then contain all the administrative costs which occur. At the end of the period, you can then either settle this over-/underabsorption from the cost center (for example, to a profitability segment), with assignment to a service profit center, or assess or distribute it directly in classic Profit Center Accounting or in new General Ledger Accounting to the relevant profit centers, with assignment to an allocation profit center. In either case, the corresponding profit center is credited at the end of the period.
● It might be conceivable that you would not assign auxiliary cost centers which are credited at the end of the period to profit centers. However, in this case, these costs are updated under a dummy profit center or without a profit center, which makes it more difficult to reconcile Cost Center Accounting and Financial Accounting. We therefore recommend that you assign all assignment objects.
For more information on the dummy profit center or on default profit centers, see the following sections:
○ For classic Profit Center Accounting, under Dummy Profit Center
○ For new General Ledger Accounting, under Dummy and Default Profit Centers.