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: -A cost center is a business unit that is only responsible for the costs that it incurs. The manager of a cost center is not responsible for revenue generation or asset usage. The performance of a cost center is usually evaluated through the comparison of budgeted to actual costs.
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: -A cost center is a department or function within an organization that does not directly add to profit but still costs the organization money to operate.