Cost centre

Cost center is that part/parts of an organization/company that indirectly contributes to profit, but has no direct involvement. In addition it adds to the cost of running a company in various ways.. Research and development centers are typical example of cost centre.

Although in facts and figures, cost center may not show any demonstrable profit.However, it can add to revenue in various ways. Innovations or fulfillment of things can help for organization.

Because of the cost factors involved compared to profit, Cost centre is seen to have a negative impact on profit. Financial investments on the infrastructure and resources are at times, not quantified to facts and figures or for that put into statistics to justify decisions. As such Organizational decisions (like cutoff and things) are mostly for Cost centers.

Cost centre in SAP

Cost centres are based on controlling areas in SAP
To see the different categories of cost centres available and to add, we use tcode OKA2


To see the cost centre heierachy as it is KSH2.

The below screenshot is KSH2 view of CO area CO01.