Utilizing Cost Center Categories


After completing this lesson, you will be able to Explain the usage of cost center categories.

Cost Center Categories

Due to recurring complaints from managers about incorrect activities being allocated to their cost centers, you want to restrict the activity types with which certain cost centers can be posted to, and that similar cost centers can collect the same type of data (such as actual and planned data).

When defining cost center master data through the Manage cost centers app, several fields are mandatory. The cost center category is a one-digit indicator that specifies the type of the cost center and helps in setting default properties and allowed activities. Examples of cost center categories can include administration, production, sales, or materials.

Cost center categories allow you to apply the same characteristics to similar cost centers using default values. This can be helpful in prescribing standard actions to a specific range of cost centers. A practical application of this would be to avoid unintentional use, for instance, of production activities by administrative cost centers.

Depending on the cost center category selection, different default control indicators are applied to cost center master data.

In the example cost center category M (Materials), due to the category settings (refer to the screenshot), allows all types of postings for costs and quantities (with the lock indicators turned "off") but prevent you from posting revenues (lock indicator turned "on"). These properties are inherited from cost center category M.


Common cost center categories are preconfigured in the system. You can create other cost center categories in the system configuration. To configure a cost center category, follow the steps highlighted in the figure and text below.

In the SAP S/4HANA Cloud, public edition system, you use the Manage your solution app and select the Configure your solution option. You can then apply the filters Finance for the criteria Application area and Master and Organizational Data for the Sub-Application Area field. Then, select Cost Centers and the Configuration Step 1 – Define Cost Center Categories.

You can define lock indicators for each cost center category or specify whether managing quantities is allowed. When you assign a cost center to a particular category (you do this when creating the cost center master data), the corresponding lock indicators and permitted values for this category are proposed as default values for this cost center. You can modify these for individual cost centers in the Manage Cost Centers app.

For each category you enter:

  • The name of the cost center category

  • Whether cost centers of the category can record consumption quantities,

  • Whether you can post actual primary, secondary costs and/or revenues,

  • Whether commitments are recorded and

  • A default functional area.

Cost Center Category in Activity Types

Another function of the cost center category is to define with which activity types cost centers can be used. For each activity type master data, you enter the valid cost center categories allowed (one, several up to 8 or all (*)).

In the following example, the activity type 11 for personnel hours is defined with an asterisk (*) in the Cost Center Categories field. This means that it is possible to plan this activity for all cost center categories and all cost centers can provide this activity.


The cost center category you select may also affect the Functional Area applied. In the case of the Cost Center Category M, the YB20 Functional Area is applied to each cost center with category M.

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