Creation of Cost Center
• Controlling provides information for management for decision-making.
• If facilitates co-ordination, monitoring and optimization of all process in an organization.
• Organizational Unit within a controlling area that represents a defined location of cost incurrence is called Cost Center
• Tcodes for Creation of Cost Center are
o Define Standard hierarchy – OKKP
o Creation of Cost Center – KS01
o Creation of Cost Element – KA01
• Cost Elements Describe the origin of costs.
• Cost element classifies the organization-valuated consumption of production factors within a controlling area.
• Primary Cost Elements
o Primary cost elements are used for direct posting and must be accompanied in GL a/cs in FI.
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• Creation of Std. Hierarchy for Cost center
SPRO -> Controlling -> General controlling -> Organization -> Maintain Controlling Area
– Click Position and enter your controlling area
– Select your controlling area and click details button.
– Enter the field Cost Ctr. Std Hierarchy with some hierarchy name.
– Click save button.
- Creation of Cost center
SPRO -> Controlling -> Cost center Accounting -> Master data -> Cost center -> Create Cost center
– Set Controlling Area to our controlling area.
– [On menu bar -> Extras -> Set Controlling Area]
– Enter Name, Description, Person responsible, Cost Center Category as F for production, Std. Hierarchy, Business Area as 0001 and Currency INR and click save button.
- Creation of Cost Element
SPRO -> Controlling -> Cost center Accounting -> Master data -> Cost Elements -> Create Cost element
- Set Controlling Area to our controlling area.[On menu bar -> Extras -> Set Controlling Area]m
Enter Cost Element as 400000 and valid from date and in basic data tab enter name and
description and cost element category as 1 (1 for Primary cost/cost reducing revenue)