Cost Centers, Profit Centers, and Investment Centers - Cost Centers Profit Centers and Investment Centers What is a cost center A cost center is a

Cost Centers, Profit Centers, and Investment Centers - Cost...

This preview shows page 1 out of 1 page.

Cost Centers, Profit Centers, and Investment Centers What is a cost center? A cost center is 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 center is a segment whose manager is responsible for both revenues and costs. For such a 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

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture