Cost centre and cost unit are two important concepts related to cost accounting. They are used for the purpose of planning, controlling and decision making in an organisation. This article will explore the differences between the two terms and how they can be used effectively.
About Difference Between Cost Centre And Cost Unit
| Cost Centre | Cost Unit |
|---|---|
| Group of expenses used to track costs | Individual expense item tracked for cost analysis |
| Used to allocate total costs | Used to measure actual costs |
| Composed of multiple cost units | Part of a cost centre |
| Can be divided into departments or activities | Measured in terms of quantity, time and/or value |
| Helps identify the source of costs | Assists with budgeting and forecasting |
| Focuses on controlling overhead expenses | Focus on managing variable costs |
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