Profit center hierarchy in a controlling area contains all the profit centers in it. To create/change the hierarchy structure, it can be done in Profit Center Accounting or Customizing for Profit Center Accounting.
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Assigning cost centers to profit center in an organization to reflect all the primary costs from Financial Accounting and all secondary allocations to profit centers in Cost Center Accounting. Assigning a cost center to profit center, it assigns all the cost center assets to the profit center.
Cost center planning involves entering plan figures for costs, activities, prices or statistical key figures for a cost center and a planning period. Cost center planning forms part of the overall business planning process and is required for standard costing.
Period-end closing is part of the work carried out at period-end in Overhead Cost Controlling. Period-end closing performed throughout the entire organization.
Operating expenses are frequently allocated differently in financial accounting compared to the cost accounting. With the help of the accrual calculation functions, these costs can be considered into account in the Controlling component.
In general, performing different periodic tasks in SAP system on regular, weekly, monthly, yearly, etc. One of the common task among the periodic tasks is period-end closing.
Variances in the Controlling component (CO) at period-end closing can be due to planning was overshot/undershot, the actual costs on the cost center or business process differ from the target costs and over-/under-absorption occurs on the cost center or the business process.
During the year-end closing, you can transfer carry forward open commitment values, purchase orders and funds commitments to the first period of the next fiscal year.
Product Costing is used to value the internal cost of materials and also used for production for management accounting and profitability. Due to costing’s high integration with other modules and complexity, the product costing is avoided.
Some important standard reports available for Cost Center Accounting (CO-OM-CCA) supplied in the SAP system. Standard reports are organized into four different libraries.