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Answer Posted / ravikant
A department or other section of a company where managers
are directly responsible for costs. For example, consider a
company that has a manufacturing department, a research and
development department, and a payroll department. Each
department could be a cost center, and the directors of
each department would be responsible to keep costs to as
low a level as possible. The company thus accounts for each
cost center separately, which allows managers to take
immediate responsibility for cost growth and credit for
cost cutting.
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