Profit Center Scenarios 

The profit center scenario portrays internal areas of responsibility and management structures. You can define these without reference to legally independent enterprise units. In this scenario both external sales and internal deliveries of goods and services between profit centers are taken into account. When you perform profits analysis, you can value material stocks and movement of goods between profit centers using an internal valuation approach, which you can conduct along with a legal valuation approach.

Using transfer prices you can work within a controlling area that has several profit centers assigned to it. Valuation takes place at the level of the company code or plant. We recommend defining the plant (in Customizing) as the valuation level at which parallel valuation of material stocks is carried out.

You may wish to set up profit centers for Sapo, the example enterprise, particularly if you intend to portray the enterprise structure in a business area scenario. In the business area scenario you can only value services between companies using the cost of goods manufactured method. Therefore, you can only report internal earnings – from, for example, intermediate products like casings and printed circuit boards – in a profit center scenario.

You can depict profit center hierarchies using either:

Tree Structure

Tile representation