Creation of Cost Center in SAP MM

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Creation of Cost Center

CONTROLLING

Controlling provides information for management for decision-making.

If facilitates coordination, monitoring, and optimization of all processes in an organization.

COST CENTER

The 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

Define Standard hierarchy - OKKP

Creation of Cost Center - KS01
Creation of Cost Element - KA01

COST ELEMENTS

Cost Elements Describe the origin of costs.

The cost element classifies the organization-valuated consumption of production factors within a
controlling area.

Primary Cost Elements

Primary cost elements are used for direct posting and must be accompanied in GL a/cs in FI.

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Customization

Creation of Std. The 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 the details button.
Enter the field Cost Ctr. Std Hierarchy with some hierarchy name.
Click the 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 the 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 the basic data tab enter name and
description and cost element category as 1 (1 for Primary cost/cost reducing revenue)

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