Cost centre (business)

A cost centre is a department within a company that does not produce direct profit and adds to the cost of running a company. However, all cost centres perform an important job. It improves the satisfaction of customers and indirectly increases sales. The manager and employees of cost centre are not accountable for its profit and investment decision but they are responsible for its cost. They are liable for keeping their cost in line or below budget because cost centre does not produce directly from its activities. The performance of the managers is assessed by comparing the actual expenses incurred with the budgeted expenses for the cost centre. Basically cost is the control data in the cost centre.