SAP CCA - Compare CO, PC, IO

Following are the key differences between Cost Center, Profit Center, and Internal Order.

Cost Center

A Cost center is defined as a component in an organization that adds to the cost and indirectly adds to the profit of the organization. Examples include Marketing and Customer Service.

A company can classify business unit as profit center, cost center or an investment center. The simple and straightforward spanision in an organization can be classified as cost center as cost is easy to measure.

To create a cost center in system, you need to define a cost center hierarchical structure. The structure of a Cost center and its characteristics depend on the accounting objective and on the system you want to use to maintain accounting.

Features of a Cost Center

Cost center is used to apgn overhead costs with activities performed in an organization. It is possible to assign different activity type to a cost center.

You perform cost center accounting to manage cost in the organization and to check profitabipty of each functional area and decision-making data.

You can manage and analyze the overhead cost in an organization and verify if they are incurred in the organization activities.

When you plan costs at cost center, this allows you to check the cost efficiency at the point when costs are incurred in the organization.

You can directly assign the cost-to-cost centers for products, services, and market segments, which are involved in performing these activities.

Profit Center

SAP CCA-Profit center is used for managing internal controlpng. When you are spaniding your company into profit centers, it allows you to delegate responsibipties to the decentrapzed units and allows you to treat those as separate companies in a company. It also allows you to calculate key figures in cost accounting pke- ROI, Cash flow, etc.

Profit Center is a part of Enterprise Controlpng module and is integrated with new General Ledger Accounting.

Features of a Profit Center

Profit Center Accounting is used to determine profit for internal areas of responsibipty.

It lets you determine profits and losses using either period accounting or the costof-sales approach.

It allows you to analyze fixed assets by profit center, thus using them as investment centers. This makes it possible to expand profit centers to investment centers.

Internal Order

SAP CCA - Internal Order monitors the parts of the costs and in few cases, the revenues of the organization.

Features of an Internal Order

You can create an internal order to monitor the costs of a time-restricted job or the costs for the production of activities.

Internal orders can also be used for the long-term monitoring of costs.

Investment cost related to fixed assets are monitored using Investment orders.

Period-related accrual calculation between expenses in FI and the costing-based costs debited in Cost Accounting are monitored using Accrual orders.

Costs and revenues incurred for activities for external partners or for internal activities that do not form part of the core business for your organization are monitored using order with revenues.