Question

Service departments, such as accounting, finance, general administration, legal, and personnel, are usually considered to be...

Service departments, such as accounting, finance, general administration, legal, and personnel, are usually considered to be cost centres. In addition, manufacturing facilities are often considered to be cost centres.

Select one:

True

False

Business   Accounting   
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Answer #1

Answer is true

A cost center is a center for which costs are accounted. They incur costs and their performance is monitored against cost control at end of the year. A cost center can be a division, department or function. They do not generate revenues and only incur cost in production of output or maintenance of other departments through their service. So answer is true. Manufacturing facilities are cost center since they account for cost of manufacture. Other support function such as accounting, finance, legal, personnel are service departments hence they are also cost centers.

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