Cost center

cost center
a responsibility center in which the manager has
the authority to incur costs and is evaluated on the basis
of how well costs are controlled ...

Cost center: A responsibility center of the organization that is held responsible for the costs that it incurs, but not for revenues or capital investments. A factory is a likely cost center, as is the human resources department.
...

Low Cost Centers
One might think that Functional Sourcing is a US based phenomenon and is not used frequently in other parts of the world due in part to physical distance as well as differences in culture, currency, and language.

COST CENTER
Obviously most business units incur costs, so this alone does not define a cost center. A cost center is perhaps better defined by what is lacking; the absence of revenue, or at least the absence of control over revenue generation.

Once cost centers are identified, management teams can begin studying the activities each one engages in and allocating the expenses each one incurs, including the cost of employee services.

DIVISION OR COST CENTER CODE - A code assigned by an agency to further identify its organizational structure.

Report Format for a Cost Center
A responsibility report can be generated for any of these types of responsibility centers. Illustration 25-21 shows the format for the responsibility report for a cost center.
(Report Heading)
Controllable Cost ...

Absorption: the sharing out of the costs of a cost center amongst the products which use the cost center.
Account: a record in a double entry system that is kept for each (or each class) of asset, liability, revenue and expense.

Cost centerAny division, department, or subsidiary of a company that has expenses but is not directly producing revenues. Cost of capitalThe required return for a capital budgeting project.

The company may have a complicated cost accounting system that requires detailed examinations of cost centers to determine whether the formulas utilized in determining revenue subject to section 4271 are consistent with a proper allocation of the ...

Absorption costing: An accounting practice in which fixed and variable costs of production are absorbed by different cost centers.
Abusive tax shelter: A tax shelter that somebody claims illegally to avoid or minimize tax ...

In cost accounting applications, the share of costs imputed, attributed or allocated to the cost center or product being measured.
indirect leases ...

With growth comes challenges, however. How do you hire and retain employees? How do you improve cash flow and manage cost centers? These are some of the top concerns for small businesses in the coming year.

See also: Expense, Direct labor, Indirect cost, Variable cost, Acquisitions