Cost Centre in an organization is defined as a group of people or specific department which does not generate profits or revenues but incur expense to the company due to its operations. The profit contribution made by the Cost Centre department is indirect. For example, in the manufacturing industry, a group of machines within a department is considered a Cost Centre. In simple words, any segment of an organization to which expense or cost can be charged is known as ‘Cost Centre’.
A Cost Centre can be geographical that is any area or location, tangible like any machine or item or an individual-like person or group of people.