What is the difference between cost unit and cost center?
A Cost Unit
Is the quantitative unit of product or service in relation to which costs can be ascertained.
Jobs, contracts, kilowatt hours, cost per patient day
A Cost Centre
Is â€œa location, person or item of equipment ( or group of these) in respect of which costs may be ascertained and related to cost unitsâ€™
In a business, it is divided into sections called cost centre where costs are accumulated.
Example of Classification of Cost centre:
Production cost centre:
– where production takes place like machining and assembling department.
Service Cost Centre:
– which provides services to other cost centre like stores, production planning, store and maintenance.
Process Cost Centre:
– where a specific process or a continuous sequence of operations take place like refining process.
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