cost centre: meaning, definition, pronunciation and examples
B2/C1 (Low frequency in general English, common in business/professional contexts)Formal; primarily business, management, and accounting.
Quick answer
What does “cost centre” mean?
A department or unit within a company to which costs can be charged for management accounting purposes, but which does not directly generate revenue.
Audio
Pronunciation
Definition
Meaning and Definition
A department or unit within a company to which costs can be charged for management accounting purposes, but which does not directly generate revenue.
A subunit of an organization for which costs are separately identified, tracked, and managed as part of internal accounting and budgeting systems. It can also refer metaphorically to any part of an operation seen primarily as an expense rather than a source of profit.
Dialectal Variation
British vs American Usage
Differences
Spelling: 'cost centre' (UK), 'cost center' (US). No significant difference in meaning or application.
Connotations
Identical in professional contexts. In informal use, both may carry the same slightly pejorative implication of a non-revenue-generating unit.
Frequency
Equally frequent in respective business/accounting contexts in both varieties.
Grammar
How to Use “cost centre” in a Sentence
[Department X] is treated as a cost centre.Costs are charged/allocated/assigned to the [name] cost centre.The [name] cost centre has exceeded its budget.Vocabulary
Collocations
Examples
Examples of “cost centre” in a Sentence
verb
British English
- The new warehouse will be cost-centred under Logistics.
American English
- We need to cost-center these expenses properly.
adverb
British English
- This is not used adverbially.
American English
- This is not used adverbially.
adjective
British English
- The cost-centre reporting was updated quarterly.
American English
- She is the cost-center manager for North America.
Usage
Meaning in Context
Business
Primary context. 'The IT department is run as a cost centre, with its expenses allocated back to other departments.'
Academic
Used in business management, accounting, and organisational studies literature.
Everyday
Very rare. Might be used metaphorically: 'My garden has become a real cost centre this summer.'
Technical
Precise use in management accounting systems for responsibility accounting and transfer pricing.
Vocabulary
Synonyms of “cost centre”
Strong
Neutral
Weak
Vocabulary
Antonyms of “cost centre”
Watch out
Common Mistakes When Using “cost centre”
- Misspelling: 'cost center' in UK texts or 'cost centre' in US texts (though the latter is increasingly accepted).
- Using it interchangeably with 'department' without the specific accounting implication of cost tracking.
- Pronouncing 'centre' in the UK spelling with a US rhotic accent /ˈkɒst ˌsen.tɚ/ is atypical.
FAQ
Frequently Asked Questions
No, it is a neutral accounting classification. All support departments (HR, IT, Legal) are typically cost centres. It becomes 'bad' only in a reductive view that values only direct revenue generation.
A cost centre is evaluated based on its ability to control costs within a budget. A profit centre is evaluated based on its ability to generate profit (revenues minus costs).
Yes, if a previously internal support department starts selling its services externally (e.g., an IT department offering tech support to other companies), it may be reclassified as a profit centre.
In UK English, it's pronounced /ˈsen.tə/. The final 're' spelling represents a schwa /ə/ sound, not an 'r' sound.
A department or unit within a company to which costs can be charged for management accounting purposes, but which does not directly generate revenue.
Cost centre is usually formal; primarily business, management, and accounting. in register.
Phrases
Idioms & Phrases
- “[To be] seen as just a cost centre (implying a lack of perceived value)”
Learning
Memory Aids
Mnemonic
Think of a company's money flowing OUT. A COST CENTRE is a department where costs are CENTRALIZED for tracking, but profits are not.
Conceptual Metaphor
AN ORGANIZATION IS A MAP OF FINANCIAL TERRITORIES (with profit centres and cost centres as different types of regions).
Practice
Quiz
What is the primary function of a cost centre in accounting?