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A cost center is a subunit of a company that is responsible only for its costs. Example of cost centers are the production departments and the service departments within a factory and administrative departments such as IT and accounting. A profit center is a subunit of a company that is responsible for revenues and costs. Often a division of a company is a profit center because it has control over its revenues, costs, and the resulting profits. Cost centers and profit centers are usually associated with planning and control in a decentralized company.
Cost centre acts as a collecting place for certain costs before they are analysed further. Cost centres may include a department etc. A profit centre is similar to a cost centre but is accountable for costs and revenues.
cost center can be defined at a smaller level than a department. It could involve a particular job position, machine, or assembly line. However, this more detailed view of cost centers requires more detailed information tracking, and so is not commonly used.
profit center is a branch or division of a company that is accounted for on a standalone basis for the purposes of profit calculation
A profit center is a subunit of a company that is responsible for revenues and costs. Often a division of a company is a profit center because it has control over its revenues, costs, and the resulting profits. Cost centers and profit centers are usually associated with planning and control in a decentralized company.
Cost centers are the smallest segment of activity or area of responsibility for which costs are accumulated or ascertained. Where as profit centers are that segment of activity which is both responsible for Revenue and expenses and disclose profit of a particular segment of activity.
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