ECONOMICS (CBSE/UGC NET)

Detailed explanation-1: -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. Cost centers only contribute to a company’s profitability indirectly, unlike a profit center, which contributes to profitability directly through its actions.

Detailed explanation-2: -Costs are broadly classified into four types: fixed cost, variable cost, direct cost, and indirect cost.

Detailed explanation-3: -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. Example of this is the personnel department or the canteen.

Detailed explanation-4: -Impersonal cost center. Operation cost center. Personal cost centers. Product cost center. Process cost center. Service cost center.