Before you can create individual cost centers in SAP Cost Center Accounting, what type of hierarchy must first be created for the controlling area?

Introduction / Context:
In SAP Cost Center Accounting, every cost center must belong to exactly one standard hierarchy per controlling area. This hierarchy structures cost centers for planning, allocation, and reporting. The system therefore requires that the relevant hierarchy exist before you start creating cost centers. This question asks you to recall the correct term for that hierarchy.

Given Data / Assumptions:

• We are working in a controlling area in SAP CO.
• Cost centers will be created to collect and control costs.
• Each cost center must be assigned to a hierarchy node.
• The central hierarchy is defined once per controlling area.

Concept / Approach:
The standard hierarchy in Cost Center Accounting is the main cost center group that contains all cost centers of a controlling area in a tree structure. It is created and assigned to the controlling area during configuration. When you create a new cost center, it must be assigned to one node of this standard hierarchy, making the existence of the hierarchy a prerequisite for cost center creation.

Step-by-Step Solution:

Verification / Alternative check:
SAP configuration guides for Cost Center Accounting instruct you first to define a standard hierarchy and assign it to the controlling area. Only after this step can individual cost centers be created and assigned to nodes of that hierarchy. The user interface for cost center master data also shows the standard hierarchy as the structure where new cost centers are placed.

Why Other Options Are Wrong:
Option A, logical hierarchy, is not the official name used in SAP. Option B, optimum hierarchy, is not a standard configuration object. Option C, complete hierarchy, is a descriptive phrase rather than a technical term. Option E, profit center hierarchy, is a separate hierarchy used in Profit Center Accounting, not in Cost Center Accounting, and does not replace the cost center standard hierarchy.

Common Pitfalls:
A common mistake is to underestimate the importance of the standard hierarchy and attempt to create cost centers without a clear structure, which leads to difficulties in reporting. Another pitfall is confusing the cost center standard hierarchy with the profit center hierarchy or with ad hoc cost center groups created for specific allocations.

Final Answer:
The correct answer is Standard hierarchy, because SAP requires a standard cost center hierarchy to be created and assigned to the controlling area before individual cost centers can be defined.