Cost Center

Knowledge Center

What is a Cost Center? Meaning.

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.

Forum Forum about Cost Centers. Below you can ask a question about this topic, share your experiences, report a new development, or explain something. Start a new topic about Cost Centers Share your knowledge here (or ask a question)   🔥 NEW 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.... 2   2 comments

Information Sources Various sources of information regarding Cost Centers. Here you will find powerpoints, videos, news, etc. to use in your own lectures and workshops.

Research Links Jump to further research sources regarding Cost Centers. News Videos Presentations   Books Academic More

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

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

More on Management  |  Return to Management Dictionary

This ends our Cost Center summary and forum.