A cost center is a label you put on expenses (and other lines) to track where the money was spent: Machining, the Maintenance Workshop, the Admin office, Export Sales. With it you can see, for example, how much electricity Production used compared with the office, without opening a separate account for each.
When to use it
When you want your reports split by department or function. You set cost centers up once, then pick one on each voucher line.
Before you start
- Set up Cost Center Groups and Cost Center Types first. A cost center needs both, and the form will not save without them.
- You need an admin or accounts role.
Where to find it
Masters > Cost Center Master > Cost Center. The Group and Type screens sit beside it under the same Cost Center menu.
The fields on this screen
| Field (on screen) | What to enter | Required |
|---|---|---|
| Cost Center Name | Name of the branch, project or department you want to report profit and cost on. | Yes |
| Cost Center Code | Short code for this cost center. Keep it unique. | Yes |
| Cost Center Group | The group this cost center rolls up into for reporting. | Yes |
| CC Type | What kind it is, such as Production, Service, Support, Administrative or Selling and Distribution. | Yes |
How cost centers differ from Branch / Department
Branch, Department and Location each have their own screen (under Organization). A cost center is an accounting dimension. It can match one department or cut across several. Use the Type field to say what kind of cost center it is, rather than listing your departments again here.
Adding a record
- Check that the Group and Type you need already exist. If not, add them on their own screens first.
- Open Masters > Cost Center Master > Cost Center.
- Click Add / New.
- Enter the Name and a short Code, then pick the Group and the Type.
- Click Save.
Changing or deleting a record
- To edit, open the cost center from the list, make the change and Save.
- Do not delete a cost center that has already been used on vouchers. Stop using it instead, so your history stays intact.
Worked example
To set up a quality-control cost center, enter:
- Name: Quality Control Lab, Code: QC-LAB, Group: Quality Control, Type: Service / Support.
Tips and common mistakes
- Dropdowns empty? You have not added any Cost Center Groups or Types yet. Add at least one of each first.
- Use clear codes. A readable code like "STORE-RM" is far easier to pick on a voucher than a number.
- Names and codes must each be unique within your company.