The Differece Between Cost Centre and Profit Centre.

(Cost Accounting)

Cost centres are the smallest segment of activity or area of responsibility for which
costs are accumulated or ascertained. Where as profit centres are that segment of
activity which is both responsible for Revenue and expenses and disclose profit of a
particular segment of activity.

Cost centres are created for accounting convenience, where as profit centres are
created to delegate responsibility to individuals.

A cost centres does not have target cost, but efforts are made to minimize cost. But
each profit centre has a profit target.

There may be number of cost centres in a profit centre. All profit centres are cost
centres but all cost centres are not profit centres.