Cost Centre V/s.

Profit Centre
Introduction to Cost Centre
Introduction to Cost Centre
A cost center is a unit of a business organisation to which various types of costs are
allocated, segregated and eliminated. It can be any person or location or the
combination of both, for which the cost is determined. Cost centers are mainly
established in big organisations to reduce and control the cost. Its performance can be
monitored by comparing the standard costs with the actual costs incurred.

Examples of a Cost Center is a Production, Administration, Research and

Development, and Service Department of the organisation which is responsible
for the costs of that department.

Table Where Cost Centre Master Data is Stored is: CSKS

T-Code Used for Creating Cost Centre: KS01

Introduction to Profit Centre

Profit Center is a department of an organisation which works for the ascertainment of
profit. It is responsible for all activities associated with the production and sales of
goods. The aim of the profit center is the generation and maximisation of profit, by
increasing sales and decreasing the cost incurred, that will give a boost to the profit
earning capacity of the company.
Examples of a profit center can be a Sales organisation or Store.

Table Where Profit Centre Master Data is Stored is: CEPC

T-Code Used for Creating Profit Centre: KE51