A cost centre is best described as:

A cost centre is best described as:

• A. A product line for which revenue is calculated.
• B. An external department that reports to management.
• C. A function or location for which costs are ascertained.
• D. A system for budgeting.

Answer: (C)

A cost centre is an internal part of the organization where costs are accumulated for control and reporting. This description fits because a cost centre is a function or location for which costs are ascertained and managed, such as a production department or a maintenance shop. Managers are responsible for controlling those costs, but the centre may not be responsible for generating revenue or profit. The other options describe revenue-generating units, an external entity, or a budgeting system, which are not what a cost centre represents.

A cost centre is an internal part of the organization where costs are accumulated for control and reporting. This description fits because a cost centre is a function or location for which costs are ascertained and managed, such as a production department or a maintenance shop. Managers are responsible for controlling those costs, but the centre may not be responsible for generating revenue or profit. The other options describe revenue-generating units, an external entity, or a budgeting system, which are not what a cost centre represents.