COST CENTER
COST CENTER
Cost Center is a very powerful tool in the hands of accountant which if defined properly can provide a sea of information at a click of a button .
In any Accounting Software or ERP there is a concept of DIMENSION where there are generally
four to six dimensions which can be attached to be each account code and at the time of accounting
all or some of them can be chosen , If we do not those all the non chosen ones can be assigned to a
common dimension or cost center for each of the type ,
Now let us think what information do we generally need for analysis for our revenue and costs
The common ones are
1. Employee Wise Costs
The Employee Codes itself can be used as one dimension / type of Cost Centre
2. Project Wise Costs ( when we incur costs for special or new projects )
We can define various Projects say for Cost Improvement in Sales Team & increase Revenue from Local Customers are two projects in Calendar Year 2017 as Codes PSC17 ( Project Sales Cost 17 )to PRD17.( Project Revenue from Domestic Customers in 2017)
3. Department costs are also required to be readily available for analysis
Finance F17( Finance for 2017 ) , HR H7 and so on
4. Person on whom spent ( Non Employee / Contractual ) etc Again we shoud assign a uniqu code like Employee code to track all his/fer expenses .
Cost Center is a very powerful tool in the hands of accountant which if defined properly can provide a sea of information at a click of a button .
In any Accounting Software or ERP there is a concept of DIMENSION where there are generally
four to six dimensions which can be attached to be each account code and at the time of accounting
all or some of them can be chosen , If we do not those all the non chosen ones can be assigned to a
common dimension or cost center for each of the type ,
Now let us think what information do we generally need for analysis for our revenue and costs
The common ones are
1. Employee Wise Costs
The Employee Codes itself can be used as one dimension / type of Cost Centre
2. Project Wise Costs ( when we incur costs for special or new projects )
We can define various Projects say for Cost Improvement in Sales Team & increase Revenue from Local Customers are two projects in Calendar Year 2017 as Codes PSC17 ( Project Sales Cost 17 )to PRD17.( Project Revenue from Domestic Customers in 2017)
3. Department costs are also required to be readily available for analysis
Finance F17( Finance for 2017 ) , HR H7 and so on
4. Person on whom spent ( Non Employee / Contractual ) etc Again we shoud assign a uniqu code like Employee code to track all his/fer expenses .
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