COST CENTER Meaning and
Definition
-
A cost center refers to a specific department, division, or segment within an organization that is responsible for incurring costs but does not generate revenue directly. It is a department or unit primarily focused on internal activities that support the overall operations of a company rather than producing goods or services for external customers.
In a cost center, the main objective is to control and minimize expenses while still maintaining the necessary level of output. This includes monitoring and allocating costs associated with personnel, supplies, administration, maintenance, and other resources in order to ensure efficient utilization. Cost centers serve as a means of evaluating and managing the financial performance and efficiency of different departments within the organization.
Cost centers play a critical role in budgeting, decision-making, and performance evaluation within a company. They provide a framework for assessing the effectiveness of various operational activities and allow for comparison of costs against corresponding output or productivity measures. By tracking and analyzing costs within specific areas, organizations can identify areas of inefficiency or opportunities for cost reduction.
The management of cost centers involves regular reporting and analysis to assess financial performance, variances, and trends. This information can guide strategic decision-making processes, resource allocation, and cost control measures. By effectively managing cost centers, organizations can optimize resource allocation, minimize expenses, and improve overall profitability.
Common Misspellings for COST CENTER
- xost center
- vost center
- fost center
- dost center
- cist center
- ckst center
- clst center
- cpst center
- c0st center
- c9st center
- coat center
- cozt center
- coxt center
- codt center
- coet center
- cowt center
- cosr center
- cosf center
- cosg center
- cosy center
Etymology of COST CENTER
The word "cost center" emerged as a business term in the mid-20th century.
Etymologically, "cost" originates from the Old French word "coste", meaning "expense" or "outlay". It evolved from the Latin word "constāre", which means "to stand together" or "to be fixed".
"Center" derives from the Latin word "centrum", meaning "middle" or "center".
When combined, the term "cost center" refers to a department, division, or unit within an organization that incurs costs but does not generate revenue directly. The concept of cost centers became essential in accounting and management to analyze and control expenses within a company.
Infographic
Add the infographic to your website:
