Cost Center

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Description of Cost Center. Explanation.

Definition Cost Center. Description.

Cost Centers are responsible for producing an agreed level of output (quantity + quality). Their efficiency is measured and rewarded according to how fully it achieves that objective.

In a Cost Center, inputs or expenses are measured in monetary terms, but output is not. Managers of these units are typically evaluated by means of productivity measures that relate the quantities of inputs used to generate the required outputs. They are evaluated on the cost efficiency with which they use a mix of inputs (labor, materials, and outside services). Because these managers are not held responsible for selling the company's products or services, they are not judged on revenues or profits.

Typical examples of these organizational entities are Manufacturing departments and Shared Services departments.

Cost Centers Forum   How to Create a Cost Center? I need to set up a cost center in our company. How do I go about it? In other words, how does one create a cost center... Please share some experiences and best practices? Thank you....           Quotes on Cost and Shared Services Centers. Quotations Hi, do you know of a remarkable, humorous quote by a famous person or a proverb related to cost and shared services centers? Please enter a reaction to share it for other people to enjoy! Please use this template: Author Name Year of Birth - Ye...         Begin a new topic

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

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This ends our Cost Center summary and forum.