What is the difference between a cost center and a profit center?

Cost centers and profit centers are usually associated with planning and control in a decentralized company. Related Questions. What is a responsibility center? Whatisthedifferencebetweenacostcenterandaprofitcenter? DefinitionofCostCenter Acostcenterisasubunitofacompanythatisresponsibleonlyforitscosts.Afewexamplesofcostcentersare: Productiondepartmentswithinafactory Servicedepartmentswithinafactory AdministrativedepartmentssuchasITandaccounting DefinitionofaProfitCenter Aprofitcenterisasubunitofacompanythatisresponsibleforrevenuesandcosts.Ifadivisionofacompanyhasresponsibilityforrevenues,costs,andtheresultingprofits,itisaprofitcenter. AdditionalComments Costcentersandprofitcentersareusuallyassociatedwithplanningandcontrolinadecentralizedcompany. RelatedQuestions Whatisaresponsibilitycenter? Whatisacostcenter? Whatistransferpricing? HowdoIlearnmoreabouttheCPAExam? Whatisresponsibilityaccounting? SeventeenyearsagoIearnedanaccountingdegree.HowshouldIproceedtobecomeaCPA? Tolearnmore,seetheRelatedTopicslistedbelow: RelatedTopics ManufacturingOverhead ImprovingProfits NonmanufacturingOverhead JoinPROorPROPlusandGetLifetimeAccesstoOurPremiumMaterials Readall2,237Testimonials PRO LifetimeAccess PROPlus LifetimeAccess VideoTraining Flashcards VisualTutorials QuickTests QuickTestswithCoaching CheatSheets BusinessForms AllPDFfiles ProgressTracking Certificate-DebitsandCredits Certificate-AdjustingEntries Certificate-FinancialStatements Certificate-BalanceSheet Certificate-IncomeStatement Certificate-CashFlowStatement Certificate-WorkingCapital Certificate-FinancialRatios Certificate-BankReconciliation Certificate-PayrollAccounting LearnMore LearnMore AbouttheAuthor HaroldAverkamp(CPA,MBA)hasworkedasauniversityaccountinginstructor,accountant,andconsultantformorethan25years.HeisthesoleauthorofallthematerialsonAccountingCoach.com.Readmoreabouttheauthor. AllTopics Bookkeeping Financial Managerial Suggested Alphabetical HowtoBegin(Video) 01.AccountingBasics 02.DebitsandCredits 03.ChartofAccounts 04.Bookkeeping 05.AccountingEquation 06.AccountingPrinciples 07.FinancialAccounting 08.AdjustingEntries 09.FinancialStatements 10.BalanceSheet 11.WorkingCapitalandLiquidity 12.IncomeStatement 13.CashFlowStatement 14.FinancialRatios 15.BankReconciliation 16.AccountsReceivableandBadDebtsExpense 17.AccountsPayable 18.InventoryandCostofGoodsSold 19.Depreciation 20.PayrollAccounting 21.BondsPayable 22.Stockholders'Equity 23.PresentValueofaSingleAmount 24.PresentValueofanOrdinaryAnnuity 25.FutureValueofaSingleAmount 26.NonprofitAccounting 27.Break-evenPoint 28.ImprovingProfits 29.EvaluatingBusinessInvestments 30.ManufacturingOverhead 31.NonmanufacturingOverhead 32.ActivityBasedCosting 33.StandardCosting AccountingCareers CertificatesofAchievement TaketheTour