DQ Odds Chpt 14 - 1 A cost center is created at the time...

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1 – A cost center is created at the time when overhead costs are apportioned to departments or allocated directly, to divisions, to individual products or to outlets. A cost center is a part of a business that does not directly generate a profit and adds to the overall costs of the business. A profit center adds up to the profitability of the company. A cost center is not necessarily expected to generate revenue whereas a profit center is. Profit centers may be treated as a separate business within the same business. 3 – Plant managers are responsible for the entire operations of the plant including its sales, costs and profits. Therefore, the budget performance reports prepared for the use of plant managers with cost centers will include the deviations arising out of sales revenue, various costs including manufacturing and production costs and the profit. The individual department supervisors are responsible only for the performance of their departments. For example, the sales manager is responsible only for deviations in sales volume, selling price and that related to sales. He is not
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