Controlling Area, Profit Center,Cost Center , Internal Order

Controlling Area:


An organizational unit within a company, used to represent a closed system for cost accounting purposes.

A controlling area may include single or multiple company codes that may use different currencies.

These company codes must use the same operative chart of accounts.

All internal allocations refer exclusively to objects in the same controlling area.

Profit center:

Profit center is an organizational unit in accounting that reflects a management-oriented structure of the organization for the purpose of internal control.

Profit Center Accounting evaluates the profit or loss of individual, independent areas within an organization.

These areas are responsible for their costs and revenues.

Cost Center:

Cost Centers are the organizational units within a controlling area that represents a location where costs

occur.

Organizational divisions can be done on the basis of functional, settlement-related, activity-related, region/section/department related, and/or responsibility-related, to monitor actual and plan figure standpoints

Where cost is captured.

Cost Element:

All Profit and Loss GL account defined in Finance Chart of account shall be created, as Cost Element This is in order

to avoid Reconciliation of FI and CO module.

As soon as Cost element is created in controlling module one needs to give Cost object to it.

Cost Object could be Material, Cost Center, Internal Order, Production Order etc.



Two Types of CE:

Primary CE - Primary cost elements, which are based on GL accounts.

Secondary CE - Secondary cost elements are used only in CO booking in case of transfer/allocation/Distribution/Recovery of cost within Controlling.



Internal Order:

An internal order is used to accumulate cost for a specific project or task for a specific time period.

An internal order is therefore used for a short period with a specific deadline.

The cost object where cost and revenue collect. Cost center, Profit center, Internal order & Cost element above all under controlling area they are link each other.