anu

• Jul 25th, 2006

 

profit centre is a managment oriented organizatinal unit created for internal controlling purpose.

they say cost centre hierarchy can be copied as profit center hierarchy...may be that means wotever u take as cost centre can be taken as a profit centre as well..e.g. departments in an organisation,or say products.But m not sure about it.

can any body clarify more on this?

MAnoj Gupta

• Jul 13th, 2007

 

Operating profit is the profit which one company is earning by their work either by trading amanufacturing etc
Profit center is like cost center
In a company if there is two three products in that case it will devide these products in profit center which will give the result from profit centers we can find which center is giveng profit and which one is giving loss

DECROSS1

 Profile Answers by DECROSS1 

• Jan 30th, 2008

 

The operating Profit is the profit (revenue minus costs) made by a trading organisation e.g. a company or shop.

A Profit Centre (PC) is an organisational element within a company or organisation. It is an element for which an individual is made responsible for the profit generated by that element. For example if you had a chain of shops each shop might be identified as a PC with the shop manager responsible for that PC. But alternatively you could have 1 PC per area of the country as the responsibility of the area manager. The PC structure should reflect the structure of the organisation.

A Cost Centre (CC) is an element to which costs are allocated. You might have the same structure of CCs and Profit Centres if you had each shop as a PC because each shop would also incur costs e.g. stock bought, wages, electricity, etc. But you don't have to follow that 1 to 1 structure. You might have an area PC and each shop as a CC, or, in a department store you might have the whole store as a PC but might allocate each department as a separate CC, so that you could track the differing costs incurred in the food department as opposed to those in the clothing department.
 
These structures are very flexible and can be adapted to the needs of a company and the way it is organised.