What is the main purpose of establishing a cost centre?
Correct answer: A. To collect and control costs for a specific location or function
- A. To collect and control costs for a specific location or function
- B. To calculate the selling price of every product
- C. To record only the cash paid to suppliers
- D. To determine the dividend payable to shareholders
Explanation
A cost centre is a department, location or function for which costs are collected and monitored. It does not necessarily produce a separately saleable product or determine dividends.
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About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
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