{"id":3313,"date":"2020-02-11T06:25:09","date_gmt":"2020-02-11T06:25:09","guid":{"rendered":"https:\/\/commerceiets.com\/?p=3313"},"modified":"2020-02-11T06:25:09","modified_gmt":"2020-02-11T06:25:09","slug":"cost-centre","status":"publish","type":"post","link":"https:\/\/commerceiets.com\/cost-centre\/","title":{"rendered":"COST CENTRE"},"content":{"rendered":"\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-1'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/commerceiets.com\/cost-centre\/#COST_CENTRE\" title=\"COST\nCENTRE\">COST\nCENTRE<\/a><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><ul class='ez-toc-list-level-4' ><li class='ez-toc-heading-level-4'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/commerceiets.com\/cost-centre\/#Cost_Centre_is_a_department_or_function_within_an_organization_that_does_not_directly_add_to_profit_but_still_costs_the_organization_money_to_operate_Cost_centers_only_contribute_to_a_companys_profitability_indirectly\" title=\"Cost Centre is a department or function within an organization that does not directly add to profit but still costs the organization money to operate. Cost centers only contribute to a company&#8217;s profitability indirectly.\">Cost Centre is a department or function within an organization that does not directly add to profit but still costs the organization money to operate. Cost centers only contribute to a company&#8217;s profitability indirectly.<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/commerceiets.com\/cost-centre\/#FEATURES_OF_COST_CENTRES\" title=\"FEATURES OF COST CENTRES\">FEATURES OF COST CENTRES<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/commerceiets.com\/cost-centre\/#TYPES_OF_COST_CENTRES\" title=\"TYPES OF COST CENTRES\">TYPES OF COST CENTRES<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/commerceiets.com\/cost-centre\/#BENEFITS_OF_COST_CENTRE\" title=\"BENEFITS\nOF COST CENTRE\">BENEFITS\nOF COST CENTRE<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/commerceiets.com\/cost-centre\/#DRAWBACKS_LIMITATIONS_OF_COST_CENTRES\" title=\"DRAWBACKS\/\nLIMITATIONS OF COST CENTRES\">DRAWBACKS\/\nLIMITATIONS OF COST CENTRES<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/commerceiets.com\/cost-centre\/#COST_UNIT\" title=\"COST\nUNIT\">COST\nUNIT<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/commerceiets.com\/cost-centre\/#i\" title=\"&nbsp;\">&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/commerceiets.com\/cost-centre\/#FEATURES_OF_COST_UNIT\" title=\"FEATURES OF COST UNIT\">FEATURES OF COST UNIT<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/commerceiets.com\/cost-centre\/#TYPES_OF_COST_UNITS\" title=\"TYPES OF COST UNITS\">TYPES OF COST UNITS<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/commerceiets.com\/cost-centre\/#DIFFERENCE_BETWEEN_COST_CENTRE_AND_COST_UNIT\" title=\"DIFFERENCE BETWEEN COST CENTRE AND COST UNIT\">DIFFERENCE BETWEEN COST CENTRE AND COST UNIT<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/commerceiets.com\/cost-centre\/#CONSLUSION\" title=\"CONSLUSION\">CONSLUSION<\/a><\/li><\/ul><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h1 class=\"has-text-align-center wp-block-heading\" id=\"cost-centre\"><span class=\"ez-toc-section\" id=\"COST_CENTRE\"><\/span>COST\nCENTRE<span class=\"ez-toc-section-end\"><\/span><\/h1>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"cost-centre-is-a-department-or-function-within-an-organization-that-does-not-directly-add-to-profit-but-still-costs-the-organization-money-to-operate-cost-centers-only-contribute-to-a-company-s-profitability-indirectly\"><span class=\"ez-toc-section\" id=\"Cost_Centre_is_a_department_or_function_within_an_organization_that_does_not_directly_add_to_profit_but_still_costs_the_organization_money_to_operate_Cost_centers_only_contribute_to_a_companys_profitability_indirectly\"><\/span>Cost Centre is a department or function within an organization that does not directly add to profit but still costs the organization money to operate. Cost centers only contribute to a company&#8217;s profitability indirectly.<span class=\"ez-toc-section-end\"><\/span><\/h4>\n\n\n\n<p>A <a href=\"https:\/\/commerceiets.com\/cost-accounting\/\" target=\"_blank\" rel=\"noreferrer noopener\" aria-label=\"cost (opens in a new tab)\">cost<\/a> center can be defined at a smaller level than a department. It could involve a particular job position, machine, or assembly line. However, this more detailed view of cost centers requires more detailed information tracking, and so is not commonly used.<\/p>\n\n\n\n<p><strong>ACCORDING TO E. L. KOHLER<\/strong><\/p>\n\n\n\n<p>A cost centre is \u201can organisational division, department or\nself-division, a group of machines, men or both. It includes any unit of\nactivity into which a manufacturing plant or other operating organisation is\ndivided for purposes of cost assignment and allocation\u201d.<\/p>\n\n\n\n<p><strong>ACCORDING TO THE TERMINOLOGY OF CHARTERED INSTITUTE OF MANAGEMENT ACCOUNTANTS<\/strong><\/p>\n\n\n\n<p>\u201cA cost centre is a location, person or item of equipment or\ngroup of these, for which cost may be ascertained and used for the purpose of\ncost control.\u201d<\/p>\n\n\n\n<p>The performance of a cost center is usually evaluated\nthrough the comparison of budgeted to actual costs. The costs incurred by a\ncost center may be aggregated into a cost pool and allocated to other business\nunits, if the cost center performs services for the other business units.\nExamples of cost centers are as follows:<\/p>\n\n\n\n<ul><li>Accounting department<\/li><li>Human resources department<\/li><li>IT department<\/li><li>Maintenance department<\/li><li>Research &amp; development<\/li><\/ul>\n\n\n\n<p>Cost Centre is a location, person or item of equipment for which\ncost may be ascertained and used for the purpose of cost control. From\nfunctional point of view, a cost centre may be relatively easy to establish,\nbecause a cost centre is any unit of the organization to which costs can be\nseparately attributed.<\/p>\n\n\n\n<p>A cost centre is an individual activity or group of similar\nactivities for which costs are accumulated. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"features-of-cost-centres\"><span class=\"ez-toc-section\" id=\"FEATURES_OF_COST_CENTRES\"><\/span>FEATURES OF COST CENTRES<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li>A cost center is a function within an organization that does not directly add to profit but still costs money to operate, such as the Accounting, Human Resource, or Information Technology departments.&nbsp;<\/li><li>The main use of a cost center is to track actual expenses for comparison to budget.<\/li><li>A cost center indirectly contributes to a company\u2019s profit via operational excellence, customer service, and enhanced product value.<\/li><li>The manager for a cost center is only responsible for keeping costs in line with budget and does not bear any responsibility regarding revenue or investment decisions.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"types-of-cost-centres\"><span class=\"ez-toc-section\" id=\"TYPES_OF_COST_CENTRES\"><\/span><strong>TYPES OF COST CENTRES<\/strong><strong><\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p><strong>Personal Cost Centres<\/strong><\/p>\n\n\n\n<p>A cost centre which consists of a person or group of persons is\ncalled \u2018personal cost centre\u2019. Example: Sales manager, Works manager, etc. <\/p>\n\n\n\n<p><strong>Impersonal Cost Centres<\/strong><\/p>\n\n\n\n<p>An impersonal cost\ncentre consists of a location or item of equipment, production department, a\nmachine or a group of machines.<\/p>\n\n\n\n<p><strong>Production Cost Centres<\/strong><\/p>\n\n\n\n<p>Production cost centres are engaged in production activity by\nconversion of raw material into finished production. For example, maintenance\ndepartment is a service department provides service to other cost centres which\ninclude both production cost centres and service cost centres. <\/p>\n\n\n\n<p><strong>Service Cost Centres<\/strong><\/p>\n\n\n\n<p>Service cost centres are those which are ancillary to and render service to other production and service cost centres. A power house is a service cost centre generates and supplies power not only to production cost centres but also to other service cost centres.<\/p>\n\n\n\n<p><strong>Process Cost Centre<\/strong><\/p>\n\n\n\n<p>A cost centre in which a specific process or a continuous\nsequence of operations is carried out.<\/p>\n\n\n\n<p><strong>Profit Centre<\/strong><\/p>\n\n\n\n<p><strong>Chartered Institute of Management Accountants, London<\/strong> defines Profit Centre as \u201ca segment of the business entity by which both revenues are received and expenses are incurred or controlled\u201d.<\/p>\n\n\n\n<p>A Profit Centre is any sub-unit of an organization to which both\nrevenues and costs are assigned, so that the responsibility of a sub-unit may\nbe measured. Profit centre is a segment of the business entity by which both\nrevenues are received and expenditures are caused are controlled. Such revenues\nand expenditure being used to evaluate segmental performance.<\/p>\n\n\n\n<p>In profit centre, both inputs and outputs are capable of\nmeasurement in financial terms and it provides more effective assessment of the\nmanagers performance since both costs and revenues are measured in monetary\nterms.<\/p>\n\n\n\n<p>A division of a company which produces and markets the products\nmay be called as \u2018profit centre\u2019. The performance of a profit centre is\nevaluated in terms of the fact whether the centre has achieved its budgeted\nprofits.<\/p>\n\n\n\n<p><strong>Investment Centre<\/strong><\/p>\n\n\n\n<p>Where a divisional manager of a company is allowed some\ndiscretion about the amount of investment undertaken by the division, assessment\nof results by profit alone is clearly inadequate. The profit earned must be\nrelated to the amount of capital invested.<\/p>\n\n\n\n<p>Such divisions are sometimes called \u2018Investment centres\u2019 for\nthis reason performance is measured by return on capital employed (ROCE), often\nreferred to as return on investment (ROI) and other subsidiary ratios, or by\nresidual income (RI). For an investment centre organization, the conditions\nwhich are necessary for a profit centre organization must exist.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"benefits-of-cost-centre\"><span class=\"ez-toc-section\" id=\"BENEFITS_OF_COST_CENTRE\"><\/span>BENEFITS\nOF COST CENTRE<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li><strong>Monitoring&nbsp;efficiency:<\/strong> Cost centres are beneficial as they allow the effectiveness of all aspects within a company to be monitored closely.<\/li><li><strong>Employee confidence: <\/strong>The delegation of authority that takes place when making employees accountable for cost centre is a way to improve confidence. Loss prevention \u2013 Cost centres try to update processes, be more effective and save money so that they can reduce the expenses. Cost centres try to cover all of their costs with offsetting revenue by reducing expenses and producing unpredicted revenue, thus preventing loss.<\/li><\/ul>\n\n\n\n<ul><li><strong>Increasing profit: <\/strong>If one of the cost centres is removed from a firm then it has a negative impact on the&nbsp;profit margin&nbsp;of that firm. For example, if an HR department was removed then basic employment functions and essential business processes cannot be performed which will affect the firm&#8217;s profit negatively. <\/li><li><strong>Management efficiency: <\/strong>Managers compare cost data from different time periods in order to see whether the cost centre is becoming more or less profitable. Generally a specific person (a cost centre manager) is held accountable for costs incurring in the cost centre under his or her control, in which case, collecting and comparing costs may motivate the manager to be more productive.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"drawbacks-limitations-of-cost-centres\"><span class=\"ez-toc-section\" id=\"DRAWBACKS_LIMITATIONS_OF_COST_CENTRES\"><\/span>DRAWBACKS\/\nLIMITATIONS OF COST CENTRES<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<ul><li><strong>Negative effects on other departments: <\/strong>Although the cost of operating a specific department is simple to calculate, cost centres are a source of encouragement for managers to underfund their elements so that it can benefit the cost centre, which can have a harmful effect on other departments within the firm.<\/li><li><strong>Hard to monitor efficiency:<\/strong> It is hard to keep a track of how efficient these centres.<\/li><li><strong>Profit can not be controlled: <\/strong>&nbsp;Divisional performance can only be evaluated in terms of cost because profit is not in control of the manager. <\/li><li><strong>Efficiency and productivity cannot be assessed properly: <\/strong>In a cost centre, the result of a decision is calculated by cost alone; the achievements of the cost centre are not measured in financial terms, therefore it is hard to assess efficiency and productivity properly. <\/li><\/ul>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"cost-unit\"><span class=\"ez-toc-section\" id=\"COST_UNIT\"><\/span>COST\nUNIT<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A cost unit is a device for the purpose of breaking up or separating costs\ninto smaller sub-divisions.<\/p>\n\n\n\n<p>Thus, these smaller sub-divisions are attributable to\nproducts or services to find out product cost or service cost or cost of&nbsp;time&nbsp;for a particular job etc.<\/p>\n\n\n\n<p><strong>ACCORDING TO THE CHARTERED INSTITUTE OF MANAGEMENT ACCOUNTANTS, LONDON<\/strong><\/p>\n\n\n\n<p>\u201cCost unit is a unit of product or service in relation to which we\nascertain costs\u201d.<\/p>\n\n\n\n<p>The forms of measurement used as cost units are normally\nthe units of physical measurements like a number, weight,&nbsp;area,&nbsp;length,&nbsp;value, time etc. A unit should be unambiguous, simple and\ncommonly used.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>\n  <strong>Sl. No<\/strong>\n  <\/td><td>\n  <strong>Cost Unit Basis<\/strong>\n  <\/td><td>\n  <strong>Types of Industries<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>1<\/strong>\n  <\/td><td>\n  Number\n  <\/td><td>\n  Automobile\n  <\/td><\/tr><tr><td>\n  <strong>2<\/strong>\n  <\/td><td>\n  Metre or Kilometre\n  <\/td><td>\n  Cable, Rope, Road Construction, Wire\n  <\/td><\/tr><tr><td>\n  <strong>3<\/strong>\n  <\/td><td>\n  Tonne\n  <\/td><td>\n  Iron and steel, Sugar, Cement, Mines and Quarries\n  <\/td><\/tr><tr><td>\n  <strong>4<\/strong>\n  <\/td><td>\n  Litre, Kilogram, Tonne\n  <\/td><td>\n  Chemicals\n  <\/td><\/tr><tr><td>\n  <strong>5<\/strong>\n  <\/td><td>\n  Cubic Metre\n  <\/td><td>\n  Gas, Casting\n  <\/td><\/tr><tr><td>\n  <strong>6<\/strong>\n  <\/td><td>\n  Square Metre\n  <\/td><td>\n  Metal Plating, Fabric Printing\n  <\/td><\/tr><tr><td>\n  <strong>7<\/strong>\n  <\/td><td>\n  Grors or Bag of Standard Weight\n  <\/td><td>\n  Nuts and Bolts\n  <\/td><\/tr><tr><td>\n  <strong>8<\/strong>\n  <\/td><td>\n  Kilo-watt hour\n  <\/td><td>\n  Power (Electricity)\n  <\/td><\/tr><tr><td>\n  <strong>9<\/strong>\n  <\/td><td>\n  Tonne-Kilometre, Passenger Kilometre\n  <\/td><td>\n  Transport\n  <\/td><\/tr><tr><td>\n  <strong>10<\/strong>\n  <\/td><td>\n  Thousand\n  <\/td><td>\n  Bricks\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"i\"><\/span>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"features-of-cost-unit\"><span class=\"ez-toc-section\" id=\"FEATURES_OF_COST_UNIT\"><\/span>FEATURES OF COST UNIT<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>A unit of cost must possess the following characteristics:<\/p>\n\n\n\n<ul><li>It must be one with which&nbsp;expenditure&nbsp;can be conveniently associated.<\/li><li>It must be appropriate or natural to&nbsp;business&nbsp;operations and the      product.<\/li><li>It must be certain or definite and not changing from time to time.<\/li><li>It must be simple to understand and to quote.<\/li><li>It must have universal acceptability.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\" id=\"types-of-cost-units\"><span class=\"ez-toc-section\" id=\"TYPES_OF_COST_UNITS\"><\/span>TYPES OF COST UNITS<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Cost units may be divided into two parts:<\/p>\n\n\n\n<p><strong>(a)\nSimple Unit:<\/strong>&nbsp;It involves the use of a single standard or unit of\nmeasurement of the goods manufactured e.g., per piece, per kilogram, per\nquintal, per tonne, per gallon, per meter etc.<\/p>\n\n\n\n<p><strong>(b)\nComposite Unit or Complex Unit:<\/strong>&nbsp;It is a\ncombination of two simple units e.g., per passenger-kilometer, per\ntonne-kilometer, per kilowatt-hour etc.<\/p>\n\n\n\n<p>Cost unit is always selected very carefully which depends on the\nnature of business operations. The cost unit of steal is naturally ascertained\nin terms of per tonne. Cost of carrying a passenger by a transporter shall\nnaturally be ascertained in cost unit of kilometer.<\/p>\n\n\n\n<h2 class=\"has-text-align-center wp-block-heading\" id=\"difference-between-cost-centre-and-cost-unit\"><span class=\"ez-toc-section\" id=\"DIFFERENCE_BETWEEN_COST_CENTRE_AND_COST_UNIT\"><\/span>DIFFERENCE BETWEEN COST CENTRE AND COST UNIT<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td>\n  <strong>BASIS FOR COMPARISON<\/strong>\n  <\/td><td>\n  <strong>COST CENTRE<\/strong>\n  <\/td><td>\n  <strong>COST UNIT<\/strong>\n  <\/td><\/tr><tr><td><strong>   Meaning   <\/strong><\/td><td>\n  Cost centre refers to a subdivision or any part of the\n  organization, to which costs are incurred, but does not contribute to the\n  company&#8217;s revenues directly.\n  <\/td><td>\n  Cost unit implies any measurable unit of product or service,\n  with respect to which costs are assessed.\n  <\/td><\/tr><tr><td><strong>   Use   <\/strong><\/td><td>\n  It is used as a basis for classifying costs.\n  <\/td><td>\n  It is used as a standard for making a comparison.\n  <\/td><\/tr><tr><td>   <strong>Cost   <\/strong><\/td><td>\n  Costs are collected and absorbed by cost units.\n  <\/td><td>\n  Costs are measured and expressed in terms of cost units.\n  <\/td><\/tr><tr><td><strong>   Ascertainment   <\/strong><\/td><td>\n  Cost Centres are ascertained as per the nature and technique\n  of production process, organization size and structure.\n  <\/td><td>\n  Cost units are ascertained as per the nature of the final\n  output and the existing trade practices.\n  <\/td><\/tr><tr><td><strong>   Sequence   <\/strong><\/td><td>\n  First\n  <\/td><td>\n  Second\n  <\/td><\/tr><tr><td><strong>   How many?   <\/strong><\/td><td>\n  Several cost centres are there, even if there is just one\n  product or service offered.\n  <\/td><td>\n  There are different cost units for different products or\n  services.\n  <\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<h3 class=\"has-text-align-center wp-block-heading\" id=\"conslusion\"><span class=\"ez-toc-section\" id=\"CONSLUSION\"><\/span>CONSLUSION<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Basically, cost centres are established for helping the management in the activities like budgeting, strategic planning, decision making and controlling. On the flip side, cost unit has no such role to play, as it is just a measure of expressing cost.<\/p>\n\n\n\n<figure class=\"wp-block-table\"><table><tbody><tr><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><td><strong>Also Study<\/strong><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/cost-accounting\/\">Cost Accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/scope-of-cost-accounting-pdf\/\">Scope of cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/elements-of-cost\/\">Elements of cost<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/types-of-cost\/\">Types of cost<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/material-control-in-cost-accounting-pdf\/\">Material control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/perpetual-inventory-system\/\">Perpetual inventory system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/pricing-of-materials\/\">Pricing of materials<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/bin-card\/\">Bin Card<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/store-ledger\/\">Stores Ledger<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/incentive-plans\/\">Incentive plans<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/overhead\/\">Overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/accounting-treatment-of-idle-time\/\">Idle time<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/system-of-wage-payment-in-cost-accounting\/\">System of wage payment in cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-time-rate-system-and-piece-rate-system\/\">Time rate vs piece rate wage system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-centre\/\">Cost Center<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/labor-turnover\/\">Labour Turnover<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/difference-between-management-accounting-and-cost-accounting\/\">Difference between management accounting and cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/allocation-and-apportionment-of-overheads\/\">Allocation and apportionment of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-allocation-and-apportionment-of-overheads\/\">Allocation vs Apportionment of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/absorption-of-overheads\/\">Absorption of overheads<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/over-absorption-and-under-absorption-of-overheads\/\">Over absorption and under absorption of overheads<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/activity-based-costing\/\">Activity based costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-traditional-costing-and-activity-based-costing\/\">Traditional costing vs ABC system<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/reconciliation-of-accounts\/\">Reconciliation of accounts<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/unit-costing\/\">Unit costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-sheet-format\/\">Cost sheet format<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-sheet-vs-production-account\/\">Cost sheet vs production sheet<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/job-costing\/\">Job costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/batch-costing\/\">Batch Costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-job-costing-and-batch-costing\/\">job costing vs batch costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/contract-costing\/\">Contract costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-job-costing-and-contract-costing\/\">Job Costing vs Contract costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/process-costing\/\">Process Costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-costing-vs-job-costing\/\">Process costing vs job costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/joint-products\/\">Joint products<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/by-products\/\">By Product&nbsp;<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/equivalent-production\/\">Equivalent production<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/marginal-costing\/\">Marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/applications-of-marginal-costing\/\">Application of marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/cost-volume-profit-analysis\/\">Cost volume profit analysis<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/tools-and-techniques-of-marginal-costing\/\">Tools and techniques of marginal costing<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/budget\/\">Budget<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/break-even-point\/\">Break even point<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/process-of-budgetary-control\/\">Process of budgetary control<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/explain-the-advantages-and-limitations-of-budgetary-control\/\">Advantages and limitations of budgetary control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/budgetary-control\/\">Budgetary Control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/zero-base-budgeting\/\">Zero base budgeting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/standard-costing\/\">Standard Costing<\/a><\/td><\/tr><tr><td><a href=\"https:\/\/commerceiets.com\/variance-analysis\/\">Variance Analysis<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-standard-costing-and-budgetary-control\/\">Standard costing vs budgetary control<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-management-accounting-and-cost-accounting\/\">Management accounting vs cost accounting<\/a><\/td><td><a href=\"https:\/\/commerceiets.com\/difference-between-financial-accounting-management-accounting-and-cost-accounting\/\">Cost accounting vs financial accounting<\/a><\/td><\/tr><\/tbody><\/table><\/figure>\n\n\n\n<div class=\"wp-block-buttons is-layout-flex wp-block-buttons-is-layout-flex\">\n<div class=\"wp-block-button\"><a class=\"wp-block-button__link\" href=\"https:\/\/www.linkedin.com\/in\/kajal-mahajan-7549b2197\/\" target=\"_blank\" rel=\"noreferrer noopener\">CONNECT ON LINKEDIN<\/a><\/div>\n<\/div>\n\n\n\n<figure class=\"wp-block-image size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"512\" height=\"152\" src=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1.jpg\" alt=\"COST CENTRE\" class=\"wp-image-4836\" srcset=\"https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1.jpg 512w, https:\/\/commerceiets.com\/wp-content\/uploads\/2019\/04\/cropped-cropped-Presentation-resize-1-300x89.jpg 300w\" sizes=\"(max-width: 512px) 100vw, 512px\" \/><figcaption>COST CENTRE<\/figcaption><\/figure>\n","protected":false},"excerpt":{"rendered":"<p>COST CENTRE Cost Centre is a department or function within an organization that does not directly add to profit but still costs the organization money to operate. Cost centers only contribute to a company&#8217;s profitability indirectly. A cost center can be defined at a smaller level than a department. It could involve a particular job&#8230;<\/p>\n<p class=\"more-link-wrap\"><a href=\"https:\/\/commerceiets.com\/cost-centre\/\" class=\"more-link\">Read More<span class=\"screen-reader-text\"> &ldquo;COST CENTRE&rdquo;<\/span> &raquo;<\/a><\/p>\n","protected":false},"author":2,"featured_media":3314,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[187],"tags":[],"_links":{"self":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3313"}],"collection":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/comments?post=3313"}],"version-history":[{"count":0,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/posts\/3313\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media\/3314"}],"wp:attachment":[{"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/media?parent=3313"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/categories?post=3313"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/commerceiets.com\/wp-json\/wp\/v2\/tags?post=3313"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}