Profit Center

Knowledge Center


Description of Profit Center. Explanation.


  1. Summary
  2. Forum
  3. Best Practices
  4. Expert Tips
  5. Resources
  6. Print

Definition Profit Center. Description.

In a Profit Center, both inputs and outputs are measured in monetary terms. Managers of these units are typically evaluated on measures that relate expenses (monetary inputs) to revenues (monetary outputs), such as operating profit or gross margin. This is fine as long as the accounting profits are consistent with the underlying cash flows. Profit centers are autonomous organizational units or departments designated as a separate entity with decision-making capabilities to affect both revenue-making and expenses processes. Often, profit centers are composed of several cost centers, expense centers and revenue centers.

Organizational issues that are highly related to autonomous profit centers are:

  1. Allocation of corporate overhead costs. Who gets to pay what?

  2. Transfer Pricing.

  3. Cannibalization by one profit center of another.

  4. Centralization and Decentralization.

Typical examples of these organizational entities are large Stores, National Branches, Divisions or Strategic Business Units of large corporations.

Profit Centers Forum
  Profit Centers Cases and Examples
Hi, do you know of a remarkable case or an interesting example of the use of profit centers in organizations?
Please enter a reaction to share it for other people to enjoy!
Thanks for contributing...!...

Profit Centers Special Interest Group

Special Interest Group


Best Practices - Profit Centers Premium

Expert Tips - Profit Centers Premium

Resources - Profit Centers Premium


Profit Centers


Profit Centers


Profit Centers


Profit Centers

Compare with: Strategic Business Unit  |  Economic Value Added  |  Investment Center  |  Cost Center  |  Revenue Center  |  Expense Center  |  Performance Management  |  Activity Based Costing  |  Balanced Scorecard  |  CSFs and KPIs  |  Value Based Management  |  Transfer Pricing

Special Interest Group Leader

You here


Return to Management Hub: Change & Organization  |  Decision-making & Valuation  |  Finance & Investing  |  Human Resources  |  Leadership

More on Management  |  Return to Management Dictionary  | 


This ends our Profit Center summary and forum.

About 12manage | Advertising | Link to us | Privacy | Terms of Service
Copyright 2016 12manage - The Executive Fast Track. V14.1 - Last updated: 27-10-2016. All names tm by their owners.