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State key Differences between Cost Center and Profit Center

State key Differences between Cost Center and Profit Center

Answers

KevinNyabute
Cost Center is a department of an organisation for which the costs are ascertained while Profit Center is a department of an organisation which ascertains the profit.
There are many cost centers in a single profit center.
The role of a profit center is very thought-provoking as compared to a cost center, as the profit center has to maximise profit along with the reduction in direct and indirect costs, but the cost center has to work only for the minimization of costs.
The cost center is responsible only for costs while the profit center is responsible for both the costs and revenue.
The performance of a cost center is evaluated by reducing the actual cost of the standard cost. Conversely, the performance of profit center is analysed by deducting the actual cost from the budgeted cost.
kevinnyabute answered the question on March 5, 2018 at 07:33

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