Dylan's BI Study Notes

My notes about Business Intelligence, Data Warehousing, OLAP, and Master Data Management

Profit Center

A profit center is one of the three responsibility centers defined in the responsibility accounting.

A profit center is an organization that incurs costs (expenses) and also generates revenues.

Example: A profit center is a segment of a business, often called a division.

Reporting Needs:

A profit and loss report (income statement) can be created against it.  A cost-volume-profit analysis and break-even analysis can be used to measure the performance of a profit center.

A profit center can have both revenue and cost budgets.  A performance report, comparing actual and budgeted revenue, could be developed.

When measuring the performance of a profit center, non-controllable fixed cost should eliminated from the report. When the performance is measured at a higher level, additional controllable cost may be added.