Group Discounts available for 3+ students and Corporate Clients

Creation of Cost Center in SAP MM

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.

Learn the core features of sap mm and become master with our expertise tutorials, 
explore SAP MM Training.


• 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)

“At TekSlate, we are trying to create high quality tutorials and articles, if you think any information is incorrect or want to add anything to the article, please feel free to get in touch with us at, we will update the article in 24 hours.”

0 Responses on Creation of Cost Center in SAP MM"

Leave a Message

Your email address will not be published. Required fields are marked *


Please Enter Your Details and Query.
Three + 6