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Cost Centers, Profit Centers, and Investment CentersWhat is a cost center?A cost centeris a segment whose manager is responsible for costs but not for revenues. A cost center can be relatively small, like a single department with a few people, but can also be quite large, such as an entire factory or the administrative area for a large firm. Some cost centers are composed of a number of smaller cost centers. For example, a factory may be segmented into many work stations, each of which is a cost center with several stations combined into departments that are also cost centers. What exactly is a profit center?A profit centeris a segment whose manager is responsible for both revenues and costs. For sucha center, a type of profit figure is used to measure performance. In some cases, only direct costs are used to determine the center’s profit figure; in others, the profit calculation includes some (or