Structure of Profit & Cost center
Hi All,
I am at the phase of defining the Organization structure of Company.
And I am facing the problem in defining the Cost center and profit center for that. Hope any one can help me in that.
Scenario is like
1. I have 5 Raw Material.
2.By processing all that I get 15 type of Finish product.
3.Four product are produce from same work center just by changing the drums(which change the nature of product) of machine. Rest of the finish products are produce in different machine(Work Center)
4. Client are selling all that finish product .
5.In many cases there client want 7finish product to be clubbed together and sell it to him. In that case we have to do some activity on that and make according to their requirement.
6.This is and ongoing permutation and combination and any 2 or 3 or 4 (which Is in point number2 )become 1 finish product , this combination create total of 40 final product.
7.And in some case they are also selling raw material also (of point number 1 ).
So in that case we have to create all that material as Finish Product and semi finish product and have to create sales view of each and every material.
And they have 7 plant across the country and do same activity.
Client requirement is that they want to identify the cost of each product .
Till now I have thought of defining the plant as segment.
Now how should I proceed with cost center and profit center for all that product.
Please help me in solving this.
Regards,
Shayam
Thanks for reply
Please correct me if I am wrong.
I am planning to created profit center for each material. As client want to determine cost and profit of each material.
But what I do in case of work center where we can only assign only one cost center. And we can have one profit center in cost center master data. And in my case from one work center we produce different finish product and I am treating each material as profit center. So if any coast incurred in that work center it will go in one cost center and accordingly to one profit centeru2026 so in that case what about other finish product produce from that work center as cost will flow to profit center which assigned to that cost center.
And what about raw material which I use in production of other good and also sell , so what profit cent will I put in that material master, will it me same of raw material or of finish the material produce from that material.
Please tell me the best way to structure the profit center and cost center in this case.
For understanding my senerio you can think of any automobile industry where each parts are manufacture and are sold separately and in combined with others. So in that case how will I assign cost center and profit center . in simple word who I structure my cost and profit center.
thanks
Shayam
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