CO – Profit Center Accounting 2

So yesterday, we have created profit center and profit center group. Go to change KCH2. DRCA is our controlling area.

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So we have created bulk drug product 1, bulk drug product 2, pharma product 1, pharma product 2. 

And similarly, Cost Center Accounting, Master Data, Cost Center Group, Change. So here, the same cost center group also we have created. Same exactly the way how we have created the profit center accounting, we have also created the cost center accounting also. And not only that, we have established a link between the cost center and the profit center. Let me open the screen. So we have established See, we have established this link like this.

So, each cost center is linked to a profit center. Our main motto is to flow the cost into the profit center. How will it flow, Ill show you. We have established these relations. One to one relation, we have established here. Now let us add one more thing. Go to FS00, and when you create sales account, 30003, so we have changed even the field status group. Previously, when we have created the GL account for sales, we have created with the G001, and now we have changed it to G029 revenue accounts.

If you take this, the main reason why you have changed this is it will activate the profit center’s field at the time of posting. In the additional account assignments settings, you’ll see cost center and, come down a little, then you’ll see Profit center is optional. 

So whenever you are going to post an accounting entry, the sales entry, etc, we have to post it to the profit center, and cost will be posted to the cost center. And we have created even the revenue element also we have done with 11- revenues.

 

Now everything is ready, let us post an accounting entry. Posting an accounting entry means, first of all, we’ll post fee expenses and then sales. Let me post the sales first. Sales means F-22. Now we have to go into Financial Accounting, Accounts Receivable, Document Entry, Invoice F-22. Because I want to know profitability by product wise so customer accounts return to sales by company code wise, DRLB. 

Say for example, 255,000 sales. Test for profit center accounting. Next line item, posting key 50, customer account return to sales. Let’s take 3 lakhs 1 Sales bulk drugs. 

Amount, 255,000. Here profit center, Sales bulk drugs product 1. What I’m doing, I’m posting this to the profit center. See, bulk drug product 1. Sales bulk drug product 1 is posted to bulk drug product 1 profit center. 

But in real scenario, sales whenever the sales are made, already profit center is by default assigned. So automatic assignment will be done. In that way, sales will be posted to the respective profit centers. 

Save it. Since it has to post to the profit centers, it will take a little time. Next, what I will do, I want to post with reference another entry. So 3 lakh 50,000 test for profit center accounting. 50 sales. 3 lakhs 2, I’ll take.

Sales bulk drugs product 2, 3 lakh 50,000. And here, let us take bulk drugs product 2.

So like that, whatever the sales that you are making, post to that respect to the profit center. Now I want to see for the entry, whatever you have posted to the profit center has been posted to profit center. Now I want to see the information system. 

Line item reports, KE5Z. 

2 lakh 55, 3 lakh 50. Profit center, 900, 101, 102. 2 profit centers we have posted.

Now let me post expenses. Go to F-02, our general ledger accounting. I want to post the expenses. For example, now when we are posting the expenses to the cost centers, and all the cost centers already have posted expenses, similarly, we are going to post some, say, for example, wages I am posting, Wages to the labor and those who are working in the production cost center. So 40103, wages I’m posting.

Wages, say 12000. Cost center, so cost center, the production cost center. Say, for example, 900101. That is bulk drug product 1. So for this, what are the wages that we have paid to the labor or the staff, etc, like, the wages we are posting. 

 

Let me do one thing. Instead of posting like this, what I will do, F-02, Go to fast data entry. Here, what I will do is, 40, 400103. That is wages. 1 lakh 20,000. Cost center, 900101. Similarly, 40, 400101. That’s nothing but salary. Say, for example, some amount like 40,000 to the same cost center. Because for this product, 910101 is nothing but bulk drugs product 1. So all these expenses belong to this cost center. I mean, in manufacturing this product, we are incurring. That’s why I’m posting to this cost center. 40, say, 400301. office rent, say some 20,000. 50. Bank account, 200405. Let me take star.

Save it. We have posted expenses to the cost center and we have posted revenues to profit center. But profit center, cost center are linked to each other. Let me post one more entry. Post with reference. So whatever the techniques that you have learned during your general ledger accounting? We can use the same. Say, for example, now here, this is 150. Wages are 150. Then coming to the staff salaries, say, 60 here. Office rent. Instead of 20, say, 30,000. 

Save it. So we have posted costs into the cost center, and revenues to the revenue center. 

 

Now let me check my report. So report checking, Controlling, Profit Center Accounting, Information System, Reports for Profit Center Accounting, Line Item Reports, KE5Z Profit Center: Actual Line Items. 

If you observe, record type, version, you can see DRLB, everything. Period 9, Fiscal year 2013. Now I want to see the profit center. Which profit center? Select 900101. Execute.

Oh, I’m sorry. I forgot to change the profit center. Okay. What I will do is now let me post to other profit center also. Let me post few more. Go to F-22. Have to post one more sales entry to the first profit center. 

That’s for profit center. 50. 300101. Bulk drug product 1. Profit center, 900101.

Now one more entry. One more expenses I want to post in F-22. What I have done, I have taken post with reference. But the problem is I forgot to change the profit center. Go to Fast data entry.  

And here I have to take cost center. The second cost center I’m taking. 

Save it. Now let us see the report. Reports for Profit Center Accounting, Line Item Reports, KE5Z Profit Center: Actual Line Items. 

For the 1st profit center, 900101. We have posted so many expenses, wages, and everything.

And 2 lakh 55, 2 lakh 55. These 2 are revenues and, all these are all expenses. So 90,000 minus means this is profit. Let me print the preview. In the print preview, I want to change the layout. 

See here, total expenses are 420, revenues are 510, and the net profitability is 90,000. Just have changed the layout for the proper presentation. Otherwise, you can say, first profit center, 5 lakh 10, then followed by expenses, 420. Net result, 90,000, that is profit. So now what have we done, in case of cost centers, you have seen only the expenses that are posted to the cost centers. But whereas in this case, I have not posted cost to the profit center. So, see, this is the profitability that has been arrived at within the profit center. So the specialty here is in the case of a cost center, it will take only costs. In the case of the profit center, we have posted only revenues. But since we have established a link between the cost center and the profit center, the expenses will be flowing into the profit center, and you can see the profitability here like this.

Let me check another, profit center, 900102. 

1 lakh 10 is the profit. If you want to see this properly, click on print preview.

Then go to this sigma by sigma icon, ‘subtotals’. Click this. So select what totals you want. Now first, I want profit center. Push it towards the left side. Then I want the cost center, so cost center, also select like this and move toward the left side. I want only profit center and cost center.

Then click on Copy. 

So in my profit center, the sales are 3 lakh 50,000, and expenses are 2 lakh 40,000, Net profit is 1 lakh 10,000. So in the previous cost center, it was 90,000.  So profit center wise profitability, you can see like this. 

And another one, come out of this to the menu. Under List-Oriented Reports, Profit Center List: Plan/Actual. You can go in here.  

From period 9 to period 9 for this profit center group DRLPCHIER. 

So for the bulk of the division, 90,000 profitability in case of 900101. And in case of 900102, 1 lakh 10,000. Total profit is 2 lakhs. This is the actual. So plan, we have not given that’s why plan is not reflected here. So the total only profitability it is showing now. Profit by profit center accounting. This is profit center and the profit center wise profitability you can see. So like this any number of profit centers, profit center wise profitability if you want to see, profit center accounting is the only method.