Cost Center known as a component in an organization where costs are incurred that adds value to the cost and adds profit of the organization. Cost Center is a simple and straightforward division in an organization.

Cost centers are grouped together into decision, control and responsibility units. Cost centers are combined as cost center groups that are used to create cost center hierarchies.

Cost center hierarchical structure should be defined first to create cost center. To create cost center, at least one cost center group should exist in the system to describe the system hierarchical structure. This cost center group is described as the standard hierarchy.

Create Cost Center Group -

A new cost center group can be created in two ways -

1. Brand new cost center group.
2. Existing cost center group as a template where the existing cost center group belongs to the same Controlling Area or COA.

In this process enter the new group name along with the existing group name. So that existing structure is appended to the new group. If any changes to the original group automatically affects the new copy group.

Below procedure to create cost center group –

Step-1: Go to KAH1 or Accounting → Controlling → Cost Center Accounting → Master Data → Cost Element Groups → Create.

Step-2: It navigates to the below screen to specify the controlling area. Enter the controlling area in which you are planning to create the cost center group and click on right mark to proceed.

Step-3: It goes to Create cost element group: Initial Screen screen. Enter the new cost center group name and click on hierarchy button or enter.

Step-4: Now Create cost element group: Structure screen will get open. Enter the group description.

Step-5: Choose the level from the below options to extend the group.

Step-6: Click on lower level to insert the cost center group at lower level of test.

Enter the new cost center group name in lower level like below.

Step-7: Click on Cost element to add cost centers to the cost centers group.

Enter the cost center range or cost center that you want to include in the group structure.

Step-8: To create the group with the structure/hierarchy, click on save button at the top.

Once the group saved, the below message appears on the status bar.