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Cost Centres and Profit Centres
Cost Centres and Profit Centres
Content
Cost Centres Profit Centres How to create them Uses of cost / profit centres Advantages Disadvantages Examples
Definitions
Cost centre An identifiable part of an organisation where costs can be calculated Profit centre An identifiable part of an organisation where costs and revenue can be calculated
Summary
Cost Centres calculate costs attributed to a specific area of the business Profit Centres calculate costs and revenues attributed to a specific area of the business Ways to generate them: by geographical area, product, brand ,department Uses of cost / profit centres they have financial, motivational and organisational uses Advantages helps control money, motivates staff Disadvantages can be difficult to do, may increase pressure