| Why do I need a Profit Centre?
Answer:
I need it because I need to have Control on Costs
and Revenue generating activities, divisions, people, processes, projects
etc. to have a firm grip on profitability which is Revenue - Cost = Profit.
It also helps to take accurate Business decisions.
Profit Centre Accounting is under Enterprise
Controlling (IMG) - Profit Centre Accounting - Master Data / Assignment
to Profit Centres. You have Cost Centres and Profit Centres in every organisation.
You as a CEO of a Company would like to identify Organisational Units that
is responsible for its balance of Costs and Revenues. A Cost Centre would
merely add to the Costs and would not generate Revenue. For example Accounts
Division in an Organisation is a Cost Centre while Sales Division is a
Profit Centre (It has costs as well as generates revenue).
The advantage of Profit Centre Accounting is
the ability of the Management to identify the Centres within the Organisation
that are Profitable and the ones that are not.
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".
You can Group Profit Centres based on the Company
criteria.
You can Assign Business Transactions that either
reflect Costs or Revenue to Profit Centre. Mapping such activities/transactions
is 90% of configuration in Profit Centre Accounting. You can assign Sales
Order to Profit Centre.
Costs can be Cost of the Material, Revenue can
be from Sales Order (Business Transaction).
To assign material masters, choose Master data
-> Current settings from the application menu, then choose Assignment:
Materials/Master.
To perform a fast assignment, choose Master data
-> Current settings from the application menu, then choose Assignment:
Materials/Fast Assignment. Alternatively, you can choose Master Data ->
Assignment Monitor -> Materials -> Fast Assignment.
You can find a detailed description of how to
assign materials in the Implementation Guide (IMG) for Profit Center Accounting,
under Assignments to Profit Centers.
Sales orders are divided into header data and
item data. Each order item is assigned separately to a profit center, since
this is the finer level of detail.
The profit center assignment is also passed on
from the sales order through the logical chain sales order ? delivery note
? goods issue ? billing document. This means that the when the goods
issue is posted, the goods usage which corresponds to the revenues is also
passed on to the profit center of the sales order.
Each production order is assigned to a plant.
Each plant, in turn, is assigned to a company code, which is assigned to
a controlling area. This controlling area must be the same as that to which
the profit center is assigned.
The transaction data in Profit Center Accounting
is stored in the accounts contained in the chart of accounts for your controlling
area. These accounts include those from Financial Accounting which are
used in Controlling (primary revenue and cost elements) and accounts which
occur only in Controlling (secondary revenue and cost elements). |
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