What is the definition of cost center and profit center ?

Cost centers: and serves as the center of responsibility has an impact on the occurrence of cost and has no effect on sales or revenue in general. The cost center in the smallest unit of activity (or area of ​​responsibility) as a basis for compiling the elements of costs, but did not achieve any revenue. It partitions the entity in which the director of the center   Responsible for the profits that section or unit, as managers of branches and are compared to the actual profits Balmkhtth. The organizational unit headed by a Director responsible for revenues and costs both in terms of revenues and costs are subject to supervision in this case.

Cost Center: A cost center is responsible only for costs and expenses incurred in operational activiteis of the department and is not responsible for generating revenues and profitability. For example a warehouse of distribution company is not responsible to sales th product and generate sales revenues. Their responsibility is limited to receive, store and ship goods in the most cost effective manner.

 

Profit Center: A Profit Center is responsible for both generating revenues and incurring expenses in normal course of business. A profit center is responsibe for profitability of the department. Like if a company is having sales offices in different provinces or countries, both are responsible to increase sales at least cost. Both are profit centers.

Such a business Structure in which each buisness manufcturing unit is responsible for all  its unit's cost and Profit.ie How much a business unit incurred a cost and how much it earns profit

cost center is nothing but a location, person or item of equipment for which cost may be ascertained and used for the purpose of cost control. For example, a production department, stores department, sales department can be cost centers. Cost units is unit of measurement of cost example per Metre, per liter, per kg and per ton etc

cost center is responsible for controlling  cost in department that  generates little bit or no revenue.

profit center is resposible  for  both  cost  and  revenue  since profit is function cost  and  revenue  

there are many kindes of centers 

1- revenue center 

2- cost center 

3- profit center 

4- investment center 

5- service center 

you want to know cost center &profit center 

 

cost center : is the center which take costs without generating revenue ( such as R&D section ) 

profit center : is center which generate revenue and take cost ( such as branch of resturants company )