A cost centre is a unit within an organization that incurs costs but does not directly generate revenue. Cost centres are typically departments or units that provide support services to other parts of the organization, such as human resources, accounting, and information technology. The costs of cost centres are allocated to other units within the organization based on a variety of factors, such as the number of employees, the amount of space used, or the level of activity.
Profit Centre
A profit centre is a unit within an organization that is responsible for generating revenue and controlling costs. Profit centres are typically divisions or product lines that have their own dedicated resources and budgets. The profitability of a profit centre is measured by its gross profit margin, which is the difference between the revenue generated by the profit centre and the direct costs incurred by the profit centre.
Revenue Centre
A revenue centre is a unit within an organization that is responsible for generating revenue from external sources. Revenue centres are typically sales or marketing departments. The success of a revenue centre is measured by its volume of sales or the total amount of revenue generated.
Investment Centre
An investment centre is a unit within an organization that is responsible for making investment decisions and managing its own assets. Investment centres are typically subsidiaries or business units that have their own separate financial statements. The performance of an investment centre is measured by its return on investment (ROI), which is the ratio of the income generated by the investment centre to the amount of capital invested in the investment centre.
