COST CENTRE
This query is : Resolved
05 July 2010
DEAR ALL
WHAT IS MEAN BY COST CENTRE
WITH EXAMPLE
WITH THANKS
K A K
WHAT IS MEAN BY COST CENTRE
WITH EXAMPLE
WITH THANKS
K A K
CMA Ramesh Krishnan
(Expert)
05 July 2010
Cost center is an object to identify the costs which incurred for the purpose of what?,which?,why?
Example: In a company divisionwise
Marketing, Production,Accounts, Human resource
Example: In a company divisionwise
Marketing, Production,Accounts, Human resource
Message likes :
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05 July 2010
Cost Centers are divisions that add to the cost of the organization, but only indirectly add to the profit of the company. Typical examples include Research and Development, Marketing and Customer service.
Although not always demonstrably profitable, a cost center typically adds to revenue indirectly or fulfills some other corporate mandate. Money spent on research and development, for example, may yield innovations that will be profitable in the future. Investments in public relations and customer service may result in more customers and increased customer loyalty.
Because the cost center has a negative impact on profit (at least on the surface) it is a likely target for rollbacks and layoffs when budgets are cut. Operational decisions in a contact center, for example, are typically driven by cost considerations. Financial investments in new equipment, technology and staff are often difficult to justify to management because indirect profitability is hard to translate to bottom-line figures.
Although not always demonstrably profitable, a cost center typically adds to revenue indirectly or fulfills some other corporate mandate. Money spent on research and development, for example, may yield innovations that will be profitable in the future. Investments in public relations and customer service may result in more customers and increased customer loyalty.
Because the cost center has a negative impact on profit (at least on the surface) it is a likely target for rollbacks and layoffs when budgets are cut. Operational decisions in a contact center, for example, are typically driven by cost considerations. Financial investments in new equipment, technology and staff are often difficult to justify to management because indirect profitability is hard to translate to bottom-line figures.
Message likes :
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CA.ViVeK M ACA
(Expert)
05 July 2010
A cost center may be the following part of an organization
1. Location
2. Person (Salary, labor welfare expense)
3.Equipment Or ( Plant and machinery 0
4. Group or combination of above
here cost are incurred as far as an organisation.
1. Location
2. Person (Salary, labor welfare expense)
3.Equipment Or ( Plant and machinery 0
4. Group or combination of above
here cost are incurred as far as an organisation.
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