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Hi
What is the Major Difference Between Profit Center and
Business Area
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Answer Posted / pradeep patil
I would like to add some more value addition pts with
distinguish between BA & PC
(.)Main distinguishing factor is that Distribution or
assessment within profit center can be done for allocation
of overheads.
No such allocation functionality is possible within
Business area.
(.)Hierarchical structure for profit center can be created.
Hierarchical structure for business area is not possible.
(.)Business area does not need to be attached to any
organization structure.
But profit centers can be created under the controlling
area.
(.)PCA helps to arrive at profitability of business unit
Business area is used to segregate FI transactions
pertaining to various
(.)Profit Center Accounting as the Product manufactured.
Business area would have been useful only when the Areas of
Business are Different.
(.)Business area concept is used for making strategic
decisions by the management whereas the primary purpose of
profit center is accounting.
(.)PCA would be much more suitable. You may need some
derivation rules for Populating Profit centers, but it
would be much more easier than using Business area and
reconciling FI-CO on monthly basis.
(.)The main difference between profit centers and business
areas is that profit centers are used for internal
management whereas business areas are geared more towards
external purposes.
| Is This Answer Correct ? | 12 Yes | 2 No |
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