Profit center
In one sentenceA part of the business, such as a branch or a product line, whose manager is accountable for both its revenues and its costs, so its performance is measured by the profit it makes.
Simply put
In a profit center the manager controls both the selling decision and the spending decision, so they are measured by the net amount left, not by sales alone.
It helps you see which branches or activities really make a profit, and which depend on others' profits.
Worked example
A chain of stores measures the profitability of one of its branches for the year.
Branch sales600,000 SAR
Cost of goods sold380,000 SAR
Branch expenses (salaries, rent and electricity)140,000 SAR
Branch profit = 600,000 − 380,000 − 140,00080,000 SAR
Don't confuse it with
Cost centerA cost center is accountable for spending only, such as the warehouse or the maintenance department, and has no revenue.
in FullScreen ERP
Cost centers in General accounts show the profitability of each branch, project or department. General accounts