This is an identifiable business unit, division or department which incurs costs but only indirectly contributes to the organisation’s profits.
Typical cost centres include corporate support activities such as human resources, finance, IT, sales and marketing, and senior management. A cost centre may not be an organisational unit; it may also be a unit of equipment, for example a large centralised photocopier used by multiple organisational units could be treated as a cost centre.
Cost centre is a term normally found in management accounting and performance management.
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