What is a cost center in sap CO? What is a profit center in sap CO? How a cost center and profit center is different in sap?

What is a cost center in sap CO?
We also use Cost center in tally which is an accounting software, the underlined meaning of cost center is SAP in both the cases but in SAP cost center is created and handled quite differently. First, it is handled under the Controlling Module and it is stored as master data.
Cost center in SAP is an organizational sub unit, it is the sole discretion of the company either it wants to consider a unit a cost center or a profit center.
How a cost center and profit center is different in sap CO?
So now you will ask how profit center is different from a cost center right? And how can you classify an organizational unit as cost center because at the same time it is also generating profit by making sales etc. right? Let me explain.
Consider an example: - you have a company in Illinois, USA but that office will have some expenses let's say warehouse that can be considered a cost center because it is not making any profit, sales office in same company incur cost but at the same time that office is also generating revenue by making sales so this time the same office is considered a profit center.
So, we can say that a profit center's work is complex because it not only incurs cost but also generates profit.
Cost center also maximizes the profit but indirectly, the warehouse house is incurring cost as it maintains the stock of good or raw material but if stock of those goods were not maintained the company would have been shut as company processes the same raw material to make finished goods which generates profit right?
Now your confusion will be the other expanses of the warehouse like electricity, workers, right? Yes, those expanses are also included in a cost center,
consider a real-life example, we go to market and purchase a good for 100 dollar (primary cost element and has direct cost to general ledger accounts) and travel expanse is 4 dollar and 2 dollars (6 dollars is secondary cost element) have been spent for food, so now if you sell the product to someone, will it be less than 106 dollars? no because that is included in that cost center right and this is the underlined concept of cost center and profit center.

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