The Meaning and Definition of Cost Centre. (Cost Accounting
Cost centres are the smallest segments of activity or area of responsibility for which costs are accumulated or ascertained.
It may be defined as “a location, person or item of equipment for which costs may be ascertained and used for the purpose of cost control”.
Generally cost centres are departments or sub-department of the organisation. Sometimes a department may also contain several cost centre. For example in an organisation, factory department is a cost centre. It contains several sections, as welding, molding, repair section etc. Each section is also treated as cost centre.