Chapter 2

Chapter 2: Cost centres

Cost centres are sections of an organisation to which costs can be charged. Profit centres - Sections of a business to which costs can be charged, income can be identified and profit can be calculated. Investment centres - A section of an organisation to which costs can be charged, income can be identified and investment can be measured.

Coding systems are used to organise and analyse data.Types of coding systems: Numeric coding Alphabetic coding Alpha-numeric coding

Units of output method:Budgeted overheads / Budgeted units of outputDirect labour hours method:Budgeted overheads / Budgeted direct labour hoursMachine hours method:Budgeted overheads / Budgeted machine hours