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Cost Centres A Cost Centre is a product, physical place (e.g. sales department) or person within a business that can be held responsible for certain expenses.

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Presentation on theme: "Cost Centres A Cost Centre is a product, physical place (e.g. sales department) or person within a business that can be held responsible for certain expenses."— Presentation transcript:

1 Cost Centres A Cost Centre is a product, physical place (e.g. sales department) or person within a business that can be held responsible for certain expenses incurred in the runnnig of that business

2 Cost centres The total costs in a business can be separated into the cost centres This assists the management in: 1.Accounting for those expenses 2.Improving the control and decision making 3.Its argued to improve staff motivation

3 Cost Centre - Analysis Some advantages Successes and failures within different parts of the business more easily identified Helps track problems and enables more effective decision making when cost reductions in the business are needed Improves the quality of management decision making

4 Cost Centres – Analysis contd Weaknesses This can create unnecessary work for some people in the business (I.e unproductive use of people resources) There may be external factors why costs are increasing and causing poor performance in the cost centres (e.g. staff rates of pay)


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