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.
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.