Differences Between Cost Center and Profit Center

Cost Center is that department within the organization which is responsible for identifying and maintaining the cost of the organization as low as possible by analyzing the processes and making necessary changes in the company whereas a Profit Center focuses on generating and maximizing revenue streams for the organization by identifying and improving activities such as sales it is much more complex and has a wide area of scope.

Cost centers and profit centers are both reasons for which a business becomes successful. A cost center is a subunit of a company that takes care of the costs of that unit. On the other hand, a profit center is a subunit of a company which is responsible for revenues, profits, and costs.

So a cost center helps a company identify the costs and reduce them as much as possible. And a profit center acts as a sub-division of a business because it controls the most important key-factors of every business.