Cost Center

A cost center is part of an organization that does not produce direct profit and adds to the cost of running a company. A cost center is often a department within a company. The manager and employees of a cost center are responsible for its costs but are not responsible for revenues or investment decisions. Examples of cost centers include research and development departments, marketing departments, help desks and customer service/contact centers.

Cost centers are not limited to departments. There might be several cost centers within a department. For example, each assembly line could be a cost center. Even a special machine could be a cost center.

A manufacturer's cost centers include each of its production departments as well as the manufacturing service departments such as the maintenance department or quality control department. Other examples of cost centers include the human resource department, the IT department, and the accounting department.