BUSINESS ADMINISTRATION
ACCOUNTING FOR MANAGEMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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YES. Both are used to ascertain cost
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YES. Both are used for cost control
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NO. Cost center is a section of the business to which costs are charged. Cost unit helps to ascertain cost for a product or service.
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Detailed explanation-1: -A cost unit is the measurement medium whereas a cost centre refers to a subdivision, location, department, or other institution. The marketing department, Research & Development department, and other cost centres are examples of cost centres.
Detailed explanation-2: -Cost center definition identifies with the expense causing development or a piece of the firm that doesn’t contribute straightforwardly to the association’s income. The cost unit is characterised as the quantifiable unit of the services and products with which the costs are related.
Detailed explanation-3: -Direct Costs: So these are the costs which are easily identified with a specific cost unit or cost centers. Some of the most basic examples are the materials used in the manufacturing of a product or the labor involved with the production process.
Detailed explanation-4: -Administration, repairs and maintenance, stores and drawing office departments are examples of a service cost centre. Mixed cost centres refer to those which are engaged some on productive and other lines on service works.