ECONOMICS

Detailed explanation-1: -Cost centre is defined as a location, machine, person, department, division, or any equipment or group of these, in relation to which direct and indirect costs may be ascertained and used for the purpose of cost control.

Detailed explanation-2: -Cost centre is a person or item for which cost may be ascertained.

Detailed explanation-3: -Personal Cost Centre: The cost centre will be considered as the personal cost centre if it refers to any person or to the group of the persons. Example of this includes works manager, sales manager etc.

Detailed explanation-4: -An example of a cost center is the accounting team within an organization. This center of activity is different from a profit center in which a profit center does generate both revenues and expenses.

Detailed explanation-5: -There are two main types of cost centres: Production cost centres, where the products are manufactured or processed. Example of this is an assembly area. Service cost centres, where services are provided to other cost centres.