Profit Center
An organizational unit in Accounting that reflects a management-oriented structure
of the organization for the purpose of internal control.
Operating results for profit centers can be analyzed using either the cost of sales
approach or the period accounting approach.
By analyzing the fixed capital as well, you can expand your profit centers for use
as investment centers.
Cost Center
An organizational unit within a controlling area that represents a defined location
of cost incurrence.
The definition can be based on:
Functional requirements
Allocation criteria
Physical location
Responsibility for costs