A cost centre is an organisational allocation unit that assigns expenses and revenues according to their place of origin, thereby making the profitability of individual company divisions visible. In SAP Business One, the cost centre forms the carrier object for cost accounting and runs parallel to financial accounting. Each cost centre must be assigned to one of up to five dimensions, such as department, region, or project.
Context
In the SAP Business One environment, cost centres are used to distribute transactions by department, project, or location, in addition to the general ledger account. This creates independent cost centre reporting without the need to segment the chart of accounts. Allocation rules distribute individual postings proportionally across multiple cost centres; when a new cost centre is created, the system automatically generates a matching 100% rule. Cost centres exclusively apply to expense and revenue accounts, as balance sheet accounts are locked by the system for cost accounting. For decision-makers, cost centre accounting thus provides the link between cost types and cost objects, and makes the Profitability individual areas measurable.
Demarcation
The cost centre is not a ledger account and does not replace an income statement or balance sheet item. It supplements financial accounting with a second level of analysis and should not be confused with a dimension: the dimension is the bracket (e.g., "Department"), the cost centre is the specific value under it (e.g., "sales It must also be distinguished from the cost carrier, which assigns costs to the generated services or products, and from the allocation rule, which merely defines the distribution key between several cost centres.
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