A Cost Center is a part of an organization where costs or income can be charged.

In BizCentric, you can utilize the Cost Center as a Profit Center.

The primary function of your Chart of Accounts is to generate reports for government and tax authorities.

Many businesses engage in various activities such as diverse product lines, market segments, and business areas, which often share common overheads. Ideally, each should have its own framework to assess profitability. To accommodate this need, there exists an alternative structure known as the Chart of Cost Centers.

A Cost Center functions similarly to an Accounting Dimension, facilitating the tracking of costs based on specific areas.

Cost Centers can be designated at the following levels:

• Company
• Item
• Order/Invoice

The Cost Center can be linked to the following transactions:

1. Sales Invoice
2. Purchase Invoice
3. Journal Entry
4. Payment Entry
5. Delivery Note

And other transactions which can be used for budgeting. You can also use Cost Center for Budgeting.

1. Cost Center tree

You can establish a hierarchy of Cost Centers to enhance the representation of your business. Each Income/Expense entry is linked to a Cost Center. If ‘Allow Cost Center In Entry of Balance Sheet Account’ is enabled in Account Settings, users can allocate entries in Balance Sheet Accounts to a Cost Center.

For instance, if your sales consist of two categories:

1. Walk-in Sales
2. Online Sales

You may incur shipping expenses for walk-in customers but not for online ones, and similarly, you may have shop rent for walk-in customers but not for online ones. To analyze the profitability of each category separately, you should create two Cost Centers: “Walk-in” and “Online,” and allocate all sales and purchases accordingly.

This approach provides deeper insights into the performance of different segments of your business. As BizCentric allows the addition of multiple companies, you can create Cost Centers for each company and manage them independently.

To access the Chart of Cost Centers, navigate to:

> Home > Accounting > Budget and Cost Center > Chart of Cost Centers.

2. How to set up Chart of Cost Centers

1. Go to the Chart of Cost Centers.
2. Add region-wise nodes.
3. Add other nodes as per your needs.

Selecting a different Company will display the Cost Centers for that Company.

3. Related Topics

1. Budgeting
2. Sales Invoice
3. Purchase Invoice