2006-10-04 20:46:17 · 4 answers · asked by ramesh d 1 in Business & Finance ➔ Other - Business & Finance
Cost centres are divisions that add to the cost of the organisation, but only indirectly add to the profit of the company. Examples include Research and Development, Marketing and Customer service.
Profit Centers are parts of a Corporation that directly add to its Profit. Usually the different profit centers are separated for Accounting purposes so that the management can follow how much profit each makes and compare their relative efficiency and profit. Examples of typical profit centers are a store, a sales organisation and a consulting organisation. Profit centers can measure profitability of business units or departments
2006-10-04 20:58:06 · answer #1 · answered by TK 4 · 0⤊ 0⤋
A profit center is the department or division of an enterprise that earns revenue from selling a product or providing a service to either an internal or external customer.
Cost center is the department or division that offers support services to the enterprise without earning a revenue.
Example: A product division of a company, which sells products in the market is a profit center.
Corporate functions of the same company which render support in HR, Admin, or finance are cost centers.
2006-10-04 21:00:03 · answer #2 · answered by Anonymous · 0⤊ 0⤋
I found this while surfing on the net:
"a cost center is concerned solely with controlling adherence to a budget. In corporate terms a cost center is charged with managing compliance to an operating cost budget that resides below the gross profit line on an income statement. Balancing your checkbook is managing a cost center. A profit center adds requirements for managing income from sales and cost of goods sold (CGS), called gross profit or gross margin. Those who have been privileged to manage both will agree that managing sales, sales income, and cost of goods sold, above the gross profit line, is considerably more difficult than managing expenses." - John Mitchell, e-mail jsmitchell@worldnet.att.net
u may get more answers by visiting this website:
http://www.thetimes100.co.uk/theory/theory.php?tID=222
www.hkcca.com/documents/HealthCheckChapman.ppt
www.aloa.co.uk/members/downloads/PDF%20Output/costcentres.pdf
Rgds,
The_Wish
2006-10-04 21:09:43 · answer #3 · answered by The_Wish 2 · 0⤊ 0⤋
cost center is the amount of ur expenses and profit center is the amount of profit u made
2006-10-04 20:53:36 · answer #4 · answered by Anonymous · 0⤊ 0⤋