Review of Cost + Profit Centres

Cost centre - an identifiable part of an organisation for which costs can be calculated. Examples include 'personnel', and IT. Departments which costs can be calculated do not create revenue and do not charge other departments for their services are included in this heading. Profit centre - an identifiable part of an organisation for which costs & revenue (and therefore profit) can be calculated. Examples include a branch of a chain of stores or …

…allocate costs - Can cause extra stress + pressure - Targets need to be achievable - Cheaper to buy items in bulk (for whole company instead of per department) A supplies department should be a cost centre for example, as it provides a service for the other departments at no cost and does not generate an income. A magazine section of a shop would be a profit centre as it's sole purpose is to generate income.