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Home > QFINANCE Dictionary > Definition of cost center

Definition of

cost center

Accounting

section of business that costs firm money a department, function, section, or individual whose cost, overall or in part, is an accepted overhead of a business in return for services provided to other parts of the organization. A cost center is usually an indirect cost of an organization's products or services.

Recommended Further Reading (Term count)
  • Activity-Based Costing
    Activity-based costing (ABC) attempts to create the big picture—crystal-clear, full, and accurate—by painting assorted little pictures.ABC identifies the relationship between a business activity and all the resources needed to conduct it by assigning costs to each of those resources, thus presenting the true total expense of the entire activity. ABC can account for so-called “soft,” or indirect, operating costs, and thus produce a more...
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cost center - Related Articles

  • Activity-Based Costing

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    Businesses have traditionally relied on the cash basis of accounting, which recognizes income when received and expenses when paid. ABC’s foundation is the accrual basis. The numbers this statement presents are assigned to the various procedures performed during a given period. Cost centers are a

  • The Missing Metrics: Managing the Cost of Complexity

    Best Practice

    Accounting systems have come a long way in the past decades. Activity-based costing revealed where costs were being incurred and what was driving them. The blizzard of regulations following the debacles involving Enron, WorldCom, and others led to the passage of the Sarbanes–Oxley Act (in the United
    By John L. Mariotti

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Definitions of ’cost center’ and meaning of ’cost center’ are from the book publication, QFINANCE – The Ultimate Resource, © 2009 Bloomsbury Information Ltd. Find definitions for ’cost center’ and other financial terms with our online QFINANCE Financial Dictionary.

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