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Profit Center
Definition and Meaning Explained

Organizational units may be either profit centers or cost centers.

What is a Profit Center?

A profit centeris a discrete unit of responsibility within a company or organization concerned primarily with maximizing profit. Profits brought in by the profit center each reporting period are, of course, a primary metric used by management to evaluate performance of the profit center organization and individuals.

The profit center concept contrasts with the cost center, a unit that incurs operating costs and other costs, but does not itself bring in revenues or profits.