Center concept
In the so-called center concept , a company is internally divided into individual small companies, so-called centers. Each center is assigned to a responsible person. This enables a personified cost and revenue responsibility . The center concept is based on an internal customer-supplier principle. This means that internal services receive a "price" at which other centers can obtain these services. In particular, efficiency increases should be achieved in the indirect service areas. Centers must offer services that can also be procured on the external market at least at the same price as the external competition. This creates enormous pressure, especially on service centers. Before the center concept was introduced, the services they provided and the associated costs were often only offset, but not questioned. These centers now have to rationalize in order to keep up with external competition. As before the center concept was introduced, cost centers are still not exposed to pressure from the external market. They often represent core competency or security-relevant areas.
With the center bill one differentiates between:
and possibly
The different center types differ in terms of their accountability. A cost center or a service center cannot and must not bear any revenue. In addition to costs, revenues are only assigned to one profit center. A profit center is therefore managed via a sales target or, better still, a contribution margin target. A cost center and a service center are managed via performance ( service agreement ) and cost targets ( budget or beyond budgeting concept).
A service center differs from a cost center because the services directly or indirectly to individual remote on the market result objects can be offset. The services of a cost center, on the other hand, can only be assigned at a very high level, possibly even only at the overall company level. Service center costs are therefore included in the profit and loss account at a low contribution margin level, while cost center costs (central overhead costs such as personnel, legal services, project management, management), on the other hand, are at a rather high DB level.
With regard to the structural logic, different variants of a center invoice are possible. The profit centers often form relatively wide-ranging areas of responsibility (divisions, business areas, markets), while cost responsibility is further decentralized ( cost center accounting ). In such cases, the cost centers and profit centers are no longer located on the same hierarchical level. In this case, the responsibilities can be divided up so that each cost center is assigned to exactly one profit center. A profit center can then contain a large number of cost centers . With regard to the income statement , the profit centers are only displayed because by definition, so even these can be assigned to the proceeds. The cost centers and service centers should therefore allocate their costs to the profit centers so that all costs are included there. Alternatively, it is also conceivable that the cost center and service center z. B. offset directly into profitability analysis using process costing . A profit center is also assigned there, which means that the costs are also assigned here.
literature
- Dirk Haid: Corporate Entrepreneurship in Strategic Management - Approach to Implementing Entrepreneurship in the Company . Deutscher Universitätsverlag, Wiesbaden 2004, ISBN 3-8244-8087-5 , p. 255 ff . ( limited preview in Google Book Search [accessed June 20, 2020]).
- Martin Hauser: Profit Centers - Center Controlling. ControllingWissen, Offenburg and Wörthsee, 2nd edition, 2007, ISBN 3-7775-0231-6
- Ralf Ewert, Alfred Wagenhofer : Internal company accounting , Springer, Berlin 2008, ISBN 978-3-540-77283-5