Aqid ERPMeaning
A cost center (مركز التكلفة) is a unit of the business that costs are collected for: a branch, a department such as maintenance or HR, a production line, or a single truck. Each expense is tagged with its cost center when it is recorded, so the books can answer not only how much was spent on fuel this year but how much each branch spent. A cost center that also earns income, such as a store, is often called a profit center.
Cost centers sit beside the chart of accounts rather than inside it: the account says what the expense is, the cost center says where it belongs. That keeps the chart short and lets the same account be reported by branch, by department or for the whole company. Shared costs, such as head-office rent, are allocated to centers on a basis like floor area or headcount.
Also called: cost centre · cost centers · profit center · مركز التكلفة · مراكز التكلفة
Example
Al Noor Trading runs three branches, in Riyadh, Jeddah and Dammam, set up as cost centers. Its electricity account shows 96,000.00 for the year; by cost center it is 52,000.00 for Riyadh, 28,000.00 for Jeddah and 16,000.00 for Dammam. Set against each branch's sales of 1,300,000.00, 1,000,000.00 and 700,000.00, Riyadh spends 4.0 halalas of electricity per riyal sold against 2.8 in Jeddah and 2.3 in Dammam, which points to its cold store.