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.

Slide 2

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

Slide 3

• Units of output method:
• Budgeted overheads / Budgeted units of output
• Direct labour hours method:
• Budgeted overheads / Budgeted direct labour hours
• Machine hours method:
• Budgeted overheads / Budgeted machine hours