What is cost center
DEFINITION of 'Cost Center'. A department within an organization that does not directly add to profit, but which still costs an organization money to operate. Cost centers only contribute to a company's profitability indirectly, unlike a profit center which contributes to profitability directly through its actions.This type of department is likely to be one of the first targets for downsizing because, on the surface, it has a negative impact on profits.ost centers only contribute to a company's profitability indirectly, unlike a profit center which contributes to profitability directly through its actions. Pega. A cost center is part of an organization that does not produce direct profit and adds to the cost of running a company. Employees and cost center management are responsible for its costs but not for the revenues or investment decisions.ypically, companies classify business units as either cost centers, profit centers or investment centers. While the cost of running a particular department is easy to measure, cost centers create incentives for managers to underfund their units in order to benefit the cost center. A cost center is part of an organization that does not produce direct profit and adds to the cost of running a company.Employees and cost center management are responsible for its costs but not for the revenues or investment decisions.ypically, companies classify business units as either cost centers, profit centers or investment centers. While the cost of running a particular department is easy to measure, cost centers create incentives for managers to underfund their units in order to benefit the cost center. Definition: A cost center is a business unit that is only responsible for the costs that it incurs.The manager of a cost center is not responsible for revenue generation or asset usage. The performance of a cost center is usually evaluated through the comparison of budgeted to actual costs.he costs incurred by a cost center may be aggregated into a cost pool and allocated to other business units, if the cost center performs services for the other business units. Examples of cost centers are as follows: 1  Accounting department. 2  Human resources department. Cost Center. Definition: A cost center is a business unit that is only responsible for the costs that it incurs. The manager of a cost center is not responsible for revenue generation or asset usage.The performance of a cost center is usually evaluated through the comparison of budgeted to actual costs.he costs incurred by a cost center may be aggregated into a cost pool and allocated to other business units, if the cost center performs services for the other business units. Examples of cost centers are as follows: 1  Accounting department. 2  Human resources department. From Wikipedia, the free encyclopedia. A cost centre is a part of an organization that does not produce direct profit and adds to the cost of running a company. Examples include research and development, marketing, help desks, and customer service and contact centres.rom Wikipedia, the free encyclopedia. A cost centre is a part of an organization that does not produce direct profit and adds to the cost of running a company. Examples include research and development, marketing, help desks, and customer service and contact centres. A cost centre is a part of an organization that does not produce direct profit and adds to the cost of running a company.Examples include research and development, marketing, help desks, and customer service and contact centres.rom Wikipedia, the free encyclopedia. A cost centre is a part of an organization that does not produce direct profit and adds to the cost of running a company. Examples include research and development, marketing, help desks, and customer service and contact centres. Cost Center. A department or other section of a company where managers are directly responsible for costs. For example, consider a company that has a manufacturing department, a research and development department, and a payroll department.ach department could be a cost center, and the directors of each department would be responsible to keep costs to as low a level as possible. The company thus accounts for each cost center separately, which allows managers to take immediate responsibility for cost growth and credit for cost cutting. cost center. A segment of a business or other organization in which costs can be segregated, with the head of that segment being held accountable for expenses. Cost centers are established in large organizations to identify responsibility and to control costs.ach department could be a cost center, and the directors of each department would be responsible to keep costs to as low a level as possible. The company thus accounts for each cost center separately, which allows managers to take immediate responsibility for cost growth and credit for cost cutting. cost center, a department, division, or other subunit of an institution established within its accounting system so that the income and expenses of the subunit can be separated from the income or expenses of other centers and monitored for cost and benefit.ost center, a department, division, or other subunit of an institution established within its accounting system so that the income and expenses of the subunit can be separated from the income or expenses of other centers and monitored for cost and benefit.
A cost center is part of an organization that does not produce direct profit and adds to the cost of running a company.