Re: [sap-acct] Profit Center vs Segment

Posted by Roy B (SAP Financials Expert)
on Jun 30 at 6:55 AM
There is one drawback to using the segment functionality in SAP and that is that a Profit Centre can only belong to one segment. If your profit centres represent product lines and your segments change, it is very difficult to change the segment embedded in the profit centre master record. However, if you use profit centre groups to represent segments rather than putting a segment code into the PC master, it is relatively easy to move a profit centre from one PC group to another if a segment changes its definition. I recently had to advise a client that was considering changing its segments from A and B to D, E and F. With segments in the profit centre masters this would be very difficult but by using profit centre groups it was not difficult at all.

Rgds, Roy

mark as helpful if it is

Roy Brookes FFA, FInstBA,
SAP? Financials Expert
Senior SAP? Financials Consultant
Published Author
Tel: +49 171 268 9635 (mobile)
Tel: +49 40 793 19642 (landline)
Skype ID: roystonbrookes
SAP? Expert Index Registration: CRF **42819*
SAP? Referral Partner for Business One

---------------Original Message---------------
From: usman khalid
Sent: Thursday, June 30, 2011 6:27 AM
Subject: Profit Center vs Segment

Dear Sitiariyani,

Segment is higher in organization level you can easily understand the difference between them through this example

Let's suppose your company selling 02 product Bikes and Cars these are the profit centers and theses 02 products were sold in 03 cities (segement)

Bikes Car

Karachi xxx xxx

Lahore xxx xxx

Faisalabad xxx xxx

Segmental reporting can be made by:
? Division.
? Product or product line.
? Sales territory.
? Service center.
? Sales Person.
? Store or branch office.
? Domestic or foreign operations.



Total CompanyBIKESCARS
$ 150,000$ 90,000$ 60,000
Less: Variable costs:

Selling and admin.
Total variable costs
Contribution margin
Less: Direct fixed costs
Divisional segment margin
Less: Unallocated common fixed costs
Net income


Division 2CarsBikes
Less: Variable costs

Selling and administrative
Total variable costs16,0007,0009,000
Contribution margin
Less: Direct fixed cost
Product line margin
Less: Unallocated common fixed costs

Divisional segment margin

The segment margin is the best measure of the profitability of a segment. Unallocated fixed costs are common to the segments being evaluated and should be left unallocated in order not to distort the performance results of segments. Note: Segment manager performance is based on all costs directly controllable by the segment manager. All variable costs ordinarily meet the criteria for both measures. The difference usually arises because a fixed cost is directly attributable to a segment but is not controllable by the manager. For example, a profit center manager may have no control over fixed costs of the segment. In a nutshell, control of costs accounts for the major difference between segment manager performance and segment performance

I think u can understand easily

Thanks with Regards

usman khalid

sap fico cosultant @siemens karachi, Pakistan

Copyright © 2011 and message author. 4343 N. Scottsdale Road Suite 280, Scottsdale, AZ 85251
Mark as helpful
View this online
Roy B
SAP Accounting Top Contributor

Contributed the most posts in a group for a month to earn a Silver Achievement
Popular White Papers

In the Spotlight
Share Knowledge About SAP Scripting. Join the Discussion Group

0 nhận xét:

Post a Comment

Blog Archive