How to create the Cost Centre Directory with the Accflex Account Program

Directory of cost centers.

What are the cost centers?

It will vary from company to another or from one activity to another?

Is there an ideal way to code and create a directory of cost centers for any company?

Are these methods different if you use general accounts program in your company?

Through this article, we will get acquainted with the concept of cost centers from a financial perspective and not from a cost or manufacturing perspective, such as what is applied in practice for companies with their various activities, and we will also review together an important set of reports that cover cost centers completely and extracted From the Akflex Accounts and Stores program

.. What does it mean to know the cost centers and why we do as evidence arboreal?

A cost center is a business unit, or an economic unit, that collects on it a certain set of cost elements, in order to be able to know the cost of this unit, and to design it in the form of a guide because it is better that it be in the form of main and subsidiary cost centers.

 Later on, there will be more details in the reports related to cost centers;

 And we will put examples in the next paragraph.

Examples of cost centers

We can consider each of the company’s departments as an independent cost center, the goal of which is to be able to know the cost of each of the company’s departments, including any of the expenses or costs. For example, I can know the IT department within the company. What transfers and what are they charged me with, what rewards and incentives, and I started very easily. I can determine the feasibility of having this department inside the company from nothing

- One of the most famous examples of cost centers is the different projects that the company holds, especially if it is a contracting company, which has many and extended projects over a period of more than one fiscal year, and the nature of this activity requires that it be in quick and present information about the costs of each project Starting From materials, materials, manufactures and other elements of different costs, and this is not all. As an accountant within contracting companies, I need to know the revenues of the extracts of each project, which is from the different projects that its adherence to the company

- We can consider the company's assets as cost centers, especially cars and production equipment. I will call you very much if you have ready information that each of the company's cars costs you a lot of maintenance, oils, greases, fuels and other costs, which in the end gives me very important information regarding the feasibility of this car Or this equipment inside the company, and it is not better that it is rented from outside.

- It is also possible to consider that the company's employees are cost centers if you want to know the cost of each employee of the company.

.

Cost center directory in the Accflex accounts program

What is the difference between cost centers and profit centers?

Likewise, we have agreed that cost centers are a unit responsible for a certain group of different cost elements, so we find that profitability centers are an organizational unit that is primarily responsible for revenues and costs together, meaning if a certain branch of the company’s branches is better able to consider it a friendly profit center because it is responsible for certain types Of revenues and certain types of costs, unlike if a specific department within the company, such as the maintenance department, it is considered a cost center because it is responsible for a certain type of cost.

It should be noted that in practice the two terms are used in the same sense, meaning it is possible to consider the branch as a cost center.

In other words, the term cost center is used to cover the two meanings

What is the importance of creating a directory of cost centers in the company?

Whether you are working with a notebook system or through a general accounts program, the presence of a tree directory of cost centers is very necessary because it provides very important information related to the company's departments, assets and employees, as well as the projects that the company holds. This information informs us about the necessity of the existence of these projects or these sections within the company.

If you are working with a general accounts program, it is certain that creating a directory of cost centers will be easier and easier than the book system, and often through the general accounts program, you can link the items of revenues and costs to cost centers so that with each client, an accounting entry is automatically linked to the cost center associated with this account.