Course Outline
Join PRO

What is a cost center?

Author:
Harold Averkamp, CPA, MBA

Definition of Cost Center

A cost center is often a department within a company. The manager and employees of a cost center are responsible for its costs but are not directly responsible for revenues or investment decisions.

Examples of Cost Centers

A manufacturer’s cost centers will often include:

  • Each of its production departments
  • Each of the service departments or support departments within a production facility, such as the maintenance department and quality control department
  • A company’s general, selling and administrative (SG&A) departments such as the company’s human resource department, sales and marketing departments, IT department, accounting department, etc.

It is also possible for a company to have several cost centers within one department. For example, each assembly line could be a separate cost center within one production department. Even a special machine could be a separate cost center.

Cost centers are usually associated with the topics of decentralization, responsibility accounting, and planning and control.

Join PRO to Track Progress

Features

Free

PRO

Lifetime Access (One-Time Fee)
Explanations
Quizzes
Q&A
Dictionary
Bookkeeping Video Training
Financial Statements Video Training
Visual Tutorials
Quick Tests
Quick Tests with Coaching
Cheat Sheets
Flashcards
Crossword Puzzles
Word Scrambles with Coaching
Bookkeeping Study Guide
Managerial and Cost Accounting Study Guide
Certificates of Achievement
Bookkeeping Certificate of Excellence
Business Forms
Printable PDF Files
Progress Tracking
Motivational Badges and Points
Motivational Medal Rankings
Motivational Activity Streaks
Public Profile Page of Achievements

About the Author

Harold Averkamp

For the past 52 years, Harold Averkamp (CPA, MBA) has
worked as an accounting supervisor, manager, consultant, university instructor, and innovator in teaching accounting online. He is the sole author of all the materials on AccountingCoach.com.

Learn More About Harold

Read 3,033 Testimonials

PRO for Teams
  • Easily onboard new users and team admins
  • Monitor individual user progress and grades
  • Monitor team progress and compare users
  • View average grades and find problem areas
  • Monitor recent activity and user achievements
PRO for Teams
Take the Tour Join Pro Upgrade to Pro