cost center


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Cost center

Any division, department, or subsidiary of a company that has expenses but is not directly producing revenues.

Cost Center

A department or other section of a company where managers are directly responsible for costs. For example, consider a company that has a manufacturing department, a research and development department, and a payroll department. Each department could be a cost center, and the directors of each department would be responsible to keep costs to as low a level as possible. The company thus accounts for each cost center separately, which allows managers to take immediate responsibility for cost growth and credit for cost cutting.

cost center

A segment of a business or other organization in which costs can be segregated, with the head of that segment being held accountable for expenses. Cost centers are established in large organizations to identify responsibility and to control costs.
References in periodicals archive ?
Cost center managers are mainly responsible for controlling production costs so that production efficiency and superior quality are ensured.
The next part of the formula is a cell reference to the cost center in cell A4.
Then, the personnel were grouped considering their position and their salaries and were aggregated in related cost center separating the official and corporate personnel.
The organizational chart includes total uses budget, general fund contribution (GFC), and fulltime equivalent (FTE) employees at the department level, and then cascades down through the cost center structure (division, subdivision, and program).
Step One: Calculate the Capacity Cost Rate for the Cost Center. The capacity cost rate for this cost center is defined as the cost of capacity supplied ($) divided by the practical capacity of resources supplied (expressed in units of time: minutes).
The modalities of differentiating are significant influenced by Secondary Cost Centers, IT services influence product or service differentiation and at the same time personnel and image differentiation is determined by HR areas.
Because cost center practices are a very significant part of GPK, the IMA studies provide a basis for describing common cost center practices in Germany.
Likewise, cost is more likely to serve as an indicator of the results of decisions made by a cost center manager.
With advertising, Discher continues, insurance companies spend varying amounts, just as they do on technology, and that is how people get the notion of treating IT as a cost center. "It's a service, and you need to make sure that service is operating efficiently," he says.
Second, even in the detailed California OSHPD data, it is not possible to distinguish inpatient and outpatient staffing at ancillary cost centers; all that is reported is productive hours at the ancillary service cost center.
In an effort to view maintenance as a positive activity, try to see it as a profit center instead of a cost center. A cost center approach is concerned strictly with adhering to the budget and decreasing expenses as much as possible.
Take the example of a company whose annual planning process required rolling up data from 1,200 Excel spreadsheets, one for each cost center. On average, it was a six-to-eight-week process each year just to get all the errors worked out.