How To Fix KZ023 - System error: Cost object hierarchy contains a loop

KZ023 - Overview

• Message type: E = Error

• Message class: KZ - Cost Object Repetitive Mfg / Process Mfg

• Message number: 023

• Message text: System error: Cost object hierarchy contains a loop

What causes this issue?

You have formed a cost object hierarchy for cost object ID numbers by
specifying higher-level cost objects for them.
If you change the higher-level cost object, a loop would occur. This is
becasue a cost object which is assigned lower down in the hierarchy
would become the higher-level cost object for a cost object higher up in
the hierarchy.

System Response

The system cannot process a hierarchy with a loop.

How to fix this error?

Check the cost object ID and change the incorrect entry.
Bear in mind that the highest node in the hierarchy is indicated with
'*' in the "Higher-level cost object" field.

Error message extract from SAP system. Copyright SAP SE.

KZ023 - Details

• The SAP error message KZ023, which states "System error: Cost object hierarchy contains a loop," typically occurs in the context of controlling (CO) when there is a circular reference in the cost object hierarchy. This can happen when cost objects (like cost centers, internal orders, or projects) are linked in such a way that they create a loop, making it impossible for the system to determine the correct flow of costs.
  
  Cause:
  
  Circular References: The most common cause of this error is that the cost objects are defined in a way that they reference each other in a circular manner. For example, if Cost Object A is assigned to Cost Object B, and Cost Object B is assigned back to Cost Object A, this creates a loop.
  Incorrect Hierarchy Setup: The hierarchy of cost objects may not be set up correctly, leading to unintended loops.
  Data Entry Errors: Manual errors during the creation or