Cost Centers & Profit Centers
Cost Centers & Profit Centers Essay Example
Organizations with decentralized operations typically divide those operations into cost and profit centers. This delineation, which is a management and strategic decision, has long-term ramifications for the success of the organization, and helps define (and is defined by) the culture which exists in the company at the time the decision is made. Companies which have operated with cost centers in the past may determine that changing some or all of those cost centers to profit centers may be more beneficial to the organization in the long-run. This research examines the considerations which must be taken into account when making this determination, and evaluates the effect that such a change might have on the organization as a whole.
A cost center is a..