Answers:
According to the Chartered Institute of Management Accountants, London,
a cost centre is“a location, person, or item of equipment (or a group of these)
for which costs may be ascertained and used for the purpose of cost control.”
In simple words, a cost centre can be defined as a
machine, a department, a person, or a group of persons for which the cost is
ascertained. A cost centre helps in controlling cost by artificially dividing
and sub-dividing the organization into different units for costing. For
example, in a laundry, different activities, such as collecting, sorting,
marking and washing, are considered as separate cost centres, and costs associated
with these activities are controlled and monitored separately.