A department within an organization that does not directly add to profit, but which still costs an organization money to operate.
A cost center is part of an organization that does not produce direct profit and adds to the cost of running a company. Employees and cost center management are responsible for its costs but not for the revenues or investment decisions. Typically, companies classify business units as either cost centers, profit centers or investment centers. While the cost of running a particular department is easy to measure, cost centers create incentives for managers to underfund their units in order to benefit the cost center. DEFINITION of 'Cost Center'. A department within an organization that does not directly add to profit, but which still costs an organization money to operate. Cost centers only contribute to a company's profitability indirectly, unlike a profit center which contributes to profitability directly through its actions. This type of department is likely to be one of the first targets for downsizing because, on the surface, it has a negative impact on profits. Cost Center. Definition: A cost center is a business unit that is only responsible for the costs that it incurs. The manager of a cost center is not responsible for revenue generation or asset usage. The performance of a cost center is usually evaluated through the comparison of budgeted to actual costs. Pega. A cost center is part of an organization that does not produce direct profit and adds to the cost of running a company. Employees and cost center management are responsible for its costs but not for the revenues or investment decisions. Cost centers and profit centers are typically treated differently within an organization. Because a cost center doesn't produce a profit directly from its activities, managers of cost centers are responsible for keeping their costs in line or below budget.
http://searchcrm.techtarget.com/definition/cost-center http://searchcrm.techtarget.com/definition/cost-center http://www.investopedia.com/terms/c/cost-center.asp http://www.accountingtools.com/definition-cost-center http://searchcrm.techtarget.com/definition/cost-center http://www.investopedia.com/terms/c/cost-center.asp
what is a cost centers