Is a particular area, department or section of a business to which costs can be directly attributed
Allows for greater control of total costs
By treating the cost centre as a separate unit, the business can measure how much they are spending on that function each year
It allows management to measure, budget and control costs for each specific function
Use of cost centres helps management utilise resources more efficiently as it gives them a better understanding of how those resources are being used
Allows for greater control of total costs and tracking expenses
