A cost center is a business unit that incurs expenses or costs but doesn’t generate any revenue. Remembering that revenue is money from selling goods and services for the company. Examples of cost centers include accounting, human resources, and IT departments.
A revenue center is a distinct operating unit of a business that is responsible for generating sales. For example, a department store may consider each department within the store to be a revenue center, such as men’s shoes, women’ shoes, men’s clothes, women’s clothes, jewelry, and so forth.
A revenue center is judged solely on its ability to generate sales; it is not judged on the amount of costs incurred. Revenue centers are employed in organizations that are heavily sales focused.
To give an organizational structure that allows the program to provide a suitable control system, it must somehow integrate the creation of “Centers of Responsibility” (cost centers, revenue centers), for subsequent management and monitoring.
@/Arpro TA, Analytical Accounting Module allows for a structure that integrates the analytical accounting and management control creation.
Through “Responsibility Centers”, we can create an analytical framework that will correspond to a greater or lesser extent with a structure of “physical” items (shops retail, department stores) or more “conceptual” (corporate departments, business areas ), or combinations of both types of elements.
One of the most important phases in the implementation of management control using an organizational structure of this type, is the analysis which will define the most appropriate to your organizations structure.
The detailed elements present in the “Card” tab of the single record, define the type of center and its characteristics.
Code: is automatically assigned by the program, uniquely identifies the center.
Description: description of the center.
Center Type: defines if the center is really existing or a fictitious definition like to group a set of elements that do not conform or are defined in the area but that contribute to costs or revenues.
Center Manager: (optional) reference of the center manager.
Activity Type performed: defines the type of activity (Production, Auxiliary, Service, Functional).
Cubic Surface, Employees, Group: optional fields to give more details.