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Answer» Following are the key uses to create cost centers and performing cost center accounting in an organization − Cost center is used to align overhead costs to activities performed in an organization. It is possible to assign different activity type to a cost center. You perform cost center accounting to manage cost in the organization and to check profitability of each functional area and decision making data. You can manage and analyze the overhead cost in an organization and to verify if they are incurred in the organization activities. When you plan costs at cost center, this allows you to check the cost efficiency at the point when cost are incurred in the organization. You can directly assign the cost to cost centers for products, services and market segments which are involved in performing these activities.
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