Question

A cost center is a unit of a business that incurs costs but does not directly generate revenues. Which of the following would definitely not be considered a cost center?A. Accounting department.B. Purchasing department.C. Research departmentD. Advertising department.E. All of these could be considered cost centers.

Answer 1

Answer:

E. All of these could be considered cost centers.

Explanation:

A cost center is a unit of a business that incurs costs but does not directly generate revenues. Generally, cost center in an organization is typically saddled with the responsibility of controlling and allocation of costs but not the generation of revenues like a profit center such as sales department.

Hence, the following departments would definitely be considered a cost center;

A. Accounting department.

B. Purchasing department.

C. Research department

D. Advertising department.