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What Is Cost Centre And Profit Centre
Posted by Anonymous on
3/23/2005 at 12:41 AM ET
I am aware the question i am posing is more inclined towards Finance but i guess it is also some how related to Marketing Please help.
3/23/2005 at 12:51 AM
A departmental account for which accounting data is collected. Identifies the smallest unit of activities or area of responsibility for which accounts are accumulated. A cost center can be a program cost center, a project, or an organizational unit such as a college, department, office, shop, etc.
An accounting term that refers to a department or function in the organization that does not generate profit. See Profit Center.
A organizational unit or department designated as a separate entity for purposes of revenue generation and cost collection, with decision- making capabilities to affect both processes.
Any segment of a business that incurs expenses while producing revenue.
The definations can be found by doing define: keyword on google and other search engines.
Sanjeev Kumar Vyas
Peter (henna gaijin)
3/23/2005 at 1:25 AM
An alternate definition often used is that a "cost center is an accounting term that refers to a department or function in the organization that does not generate profit." (found by Googling "define:Cost Center")
Profit center, then, would be one that are working directly toward making money for the company.
In companies, certain groups are traditionally cost centers, like human resources, accounting, legal, etc. These are often called staff positions. They aren't involved directly with making and selling the products that a company makes, but they spend money.
The opposite would be line positions, which are directly involved with the manufacturing and sales of a product.
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