A business unit in any company can be classified as profit center, cost center or an investment center. Cost center is a simple and straightforward division in an organization.

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 centers are grouped together into decision, control and responsibility units.

Different activity types can be assigned to a cost center and each activity type shows the specific activities in cost center. Cost center accounting used to differentiate between different activities and controlling of costs arising in an organization.

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.

Creating Cost Center -

Below process is to create the cost center 60001.

Step-1: Navigate to Accounting → Controlling → Cost Center Accounting → Master Data → Cost Center → KS01 - Create.

(OR)

Go to transaction KS01 to create cost center.

Step-2: Enter the Controlling Area and click on tick mark to proceed.

Step-3: Enter the cost center and Valid from details and click on Master Data icon.

Step-4: Create Create Cost Center: Basic Screen. Enter the new cost center name, description, User and Person Responsible, Cost Center Category, Hierarchy area, Company Code, Profit Center.

Step-5: Click on Control tab and select correct indicators.

Step-6: Click on the Save icon to save the cost center. Once the Cost Center Saved successfully, the status bar displays the below message.

Technical details -

• Transaction: KS01
• Menu Path: Accounting → Controlling → Cost Center Accounting → Master Data → Cost Center → KS01 - Create