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.