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What is cost center?

Cost center is a term given to a division or a unit inside a company which is responsible for the incurred cost but does not add profit to it directly. The profitability is gained by a company by direct business actions.

Types of cost center

There are mainly 2 categories under cost center.

  • Service cost center
  • Production cost center

You can easily know about the concept, utilization and importance of both these cost center types from our cost center homework help service.

What are the benefits of cost center?

Some of the benefits regarding cost center are:

  • It helps in reduction of losses and expenditures
  • It aids in increasing the efficiency of a company
  • It helps in improving the functioning of a company by monitoring the overall business processes

State few examples of cost center

Some of the essential examples of cost center are:

  • Research and development
  • IT department
  • Accounting department
  • Maintenance department
  • Human resources department

We have provided more of such examples in our cost center assignment help manual.

What are the functions of cost center?

There are mainly 3 functions of cost center. 2 among those are:

  • Resource allocation
  • Function specific cost

Disadvantages related to cost center

Few of the disadvantages related to cost center are as follows:

  • As profit does not stands as a direct factor, performance judgement of these departments are based on cost generation
  • Tracking efficiency of these divisions is difficult
  • Measurement of efficiency is not based on monetary platform, so productivity evaluation is arduous

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