Cost centre

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A cost center (compare the English term cost center ) is the place where costs arise and where services are provided. It is formed according to areas of responsibility, spatial, functional, organizational structure or accounting aspects. The cost center is a cost accounting object with the task of collecting the costs incurred in a part of the company, usually a department. Examples of functional cost centers are material cost centers, production cost centers, research and development cost centers, administration cost centers, and sales cost centers.

A further development of the cost center concept is the profit center , which is posted not only with costs but also with revenues and in this way enables the profitability of individual business areas to be determined.

Cost center accounting

The cost center accounting represents the connection between cost type and cost unit accounting within the cost and performance accounting . In order to clarify the question "Where did the costs arise?", The costs are divided into cost areas in the company. By means of cost center accounting, performance relationships in the company are shown, profitability is better controlled and cost unit accounting is prepared.

  • Distribution of the overhead costs broken down according to cost types to the cost centers where they were incurred ( causation principle ).
  • Activity allocation between the cost centers ( internal activity allocation ) in order to correctly distribute overhead costs .
  • Calculation of the surcharge rates for material, production, administration and sales overhead costs in order to be able to distribute them to the cost objects (work in progress and finished goods) using these surcharge rates .
  • Monitoring of costs in the individual operating departments, thereby: control of profitability.
  • Breakdown of costs into individual and overhead costs

Cost calculation

Individual costs are directly attributable to a cost unit and therefore run around cost center accounting. Overhead costs are assigned to the associated cost centers by means of an operating accounting sheet and from there, with secondary cost allocation, charged to the cost centers and cost units that are downstream in the value chain.

  • The distribution of the primary overhead costs takes place directly or indirectly (distribution with the help of assessment keys) to the respective recipient cost centers .
  • If a cost center consumes the services of another cost center (= secondary overhead costs ), this is offset by the sender cost center as an internal service to the receiver cost centers.

The Cost Center Accounting is a component of cost accounting .

Structure of cost centers

  • Auxiliary cost centers and general cost centers are also referred to as pre- cost centers or ancillary cost centers. They pass on their services to other cost centers and are only used to record and process overhead costs.
  • Main cost centers are also known as final cost centers. Your services are not charged to other cost centers, but to the cost units (e.g. products).

Cost center plan

The cost center plan is a systematically arranged compilation of all cost centers in a company. In general, the cost center plan includes:

  • General cost centers (building management, energy center , etc.)
  • Production auxiliaries (repair shop, work preparation, etc.)
  • Main production facilities ( turning shop , assembly, etc.)
  • Material locations (material testing, material storage, etc.)
  • Administration (accounting, post office, etc.)
  • Distribution (sales, advertising, etc.)

In the cost center plan, the cost centers are differentiated according to various criteria and identified with a corresponding key number system.


0: General area

  • 000: Land and buildings cost center
  • 001: Water cost center
  • 002: Steam generation cost center
  • 003: Power generation cost center
  • 004: social facilities
  • 005: Plant security

1: Material area

  • 100: purchasing department
  • 101: Material acceptance and testing
  • 102: Material warehouse

Cost center costs

Cost center direct costs

Cost center direct costs are the costs that are incurred directly on a cost center, i. In other words, they can be individually assigned to a cost center (e.g. spare parts for a machine). Evidence is provided, e.g. B. in the form of a material withdrawal slip (internal) or in accounting in the form of an invoice (external). They are to be separated from cost center overheads.

Cost center overheads

In contrast to the cost center direct costs, the cost center overheads cannot be assigned directly to an individual cost center. They arise through allocation of other upstream (auxiliary or general) cost centers.

See also

Wiktionary: Cost center  - explanations of meanings, word origins, synonyms, translations
Wiktionary: cost center accounting  - explanations of meanings, word origins, synonyms, translations