Controlling area & does not have a standard hierarchy (please assign one)

What causes this issue?

To be able to create a <GL:cost_center>cost center</> a
<GL:standard_hierarchy>standard hierarchy</> must be assigned to the
controlling area.

System Response

You cannot create any cost centers.

How to fix this error?

Create a <GL:standard_hierarchy>standard hierarchy</> for controlling
area &V1&.
In group maintenance, you can then build the structure of the standard
hierarchy and then maintain the master records.

Error message extract from SAP system. Copyright SAP SE.