A unit or activity to which costs are allocated. Also, an approach to IT Financial Management where IT is budgeted and there is nominal charging for specific services; it is concerned with both input and output costs.
Departments within an operation such as marketing, accounting, maintenance, or housekeeping, that incur expenses as they provide support services to enhance the operation and ensure customer satisfaction.
A specific activity (or group of activities) where costs are incurred or income generated. Cost Centres provide a useful structure for the accounts in organisations with several different activities or donors.
A commercial accounting practice term that is increasingly used in the non-profit cultural sector. Its aim is to provide a much clearer management tool for gauging the true cost of any given activity within the overall picture of work. This might mean apportioning (sometimes referred to as "allocating out") an appropriate share of overhead expenditure to individual productions, concerts or exhibitions. On this basis, income and expenditure accounting will demonstrate within a total annual programme which activities made a "surplus" and which lost money.
Splitting up your expenses by department. Eg. rather than having one account to handle all power costs for a company, a power account would be opened for each depatrment. You can then analyse which department is using the most power, and hopefully find of way of reducing those costs.
Cost centres are divisions that add to the cost of the organisation, but only indirectly add to the profit of the company. Examples include Research and Development, Marketing and Customer service. A cost centre is often identified with a speed type number.