Profit Center Accounting (EC-PCA)
Profit Center Accounting(EC-PCA) lets you determine profits and losses by profit center using either period accounting or the cost-of-sales approach. It also lets you analyze fixed capital and so-called "statistical key figures" (number of employees, square meters, and so on) by profit center. Consequently, you can calculate all the key figures commonly used in cost accounting (return on investment, cash flow, sales per employee, and so on).
A profit center is a management-oriented organizational unit used for internal controlling purposes. Dividing your company up into profit centers allows you to analyze areas of responsibility and to delegate responsibility to decentralized units, thus treating them as "companies within the company".
The essential difference between a profit center and a business area is that profit centers are used for internal control, while business areas are more geared toward an external viewpoint.
The profit center differs from a cost center in that cost centers merely represent the units in which capacity costs arise, whereas the person in charge of the profit center is responsible for its balance of costs and revenues.
EC-PCA is a part of the Enterprise Controlling (EC) module.
The main aim of Profit Center Accounting is to determine profit for internal areas of responsibility. It lets you determine profits and losses using either period accounting or the cost-of-sales approach.
By assigning balance sheet items (asset portfolio, payables and receivables, material stocks, work in process) to profit centers, you can analyze your company’s fixed assets by profit center, thus using them as investment centers. .. This also makes it possible for you to analyze a number of key figures by profit center, including return on investment, working capital and cash flow.
EC-PCA lets you set up your profit centers according to product (product lines, divisions), geographical factors (regions, offices or production sites) or function (production, sales). You need to make the settings inBasic Functions in order to divide the company into internal areas of responsibility. You divide your business into profit centers by assigning the profit centers to the various master data which is relevant for profits (materials, cost centers, orders, projects, sales orders, assets, cost objects and profitability segments). This lets you set up Profit Center Accounting in a way that meets your company’s requirements regardless of what sector of industry your company is in (machinery, chemicals, services, and so on) or what form of manufacturing you employ (repetitive manufacturing, make-to-order production, continuous flow production).
Every profit center is assigned to the organizational unit Controlling area. This assignment is necessary because Profit Center Accounting displays values in G/L accounts. The profit centers in a controlling area are all contained in a standard hierarchy for that controlling area.
All profit-relevant business transactions are updated in the profit center hierarchy according to G/L account at the same time they are processed in the original module of the R/3 System. All the flows of goods and services within the company are represented as deliveries and transfers between profit centers. This is true both withactual postings and in planning.
You can also transfer the balances and balance changes of certain balance sheet accounts to profit centers in realtime or periodically.
Goods movements between profit centers can be valuated either at external prices, group-internal prices or specially defined transfer prices. For more information, seeParallel Valuation Approaches/Transfer Prices .
TheInformation System provides a user-friendly tool for evaluating your plan and actual data. Because results are stored by G/L account, you can reconcile the data with the data in Financial Accounting at the cost element level. The reports contained in the standard R/3 System represent a simple information system for analyzing areas of responsibility. In addition, different tools are available which let you create your own reports to further meet the needs of your company.
To reach the application menu for Profit Center Accounting, choose Accounting
Profit Center Accounting also features the usual tools (Validation, Substitution, Archiving, ALE).