Häufig gestellte Fragen
What is a cost centre and what is cost centre accounting?
A cost centre is a clearly delineated organisational unit to which costs are allocated according to their origin, for example purchasing, production, warehousing or administration. Cost centre accounting is the middle stage of the three-stage cost and activity accounting system and answers the question of where in the company costs were incurred. It sits between cost type accounting, which records which costs arose, and cost object accounting, which clarifies what they were incurred for. It is common to distinguish between main cost centres, which are directly involved in the value creation process, and auxiliary cost centres, which merely support that process.
Is cost centre accounting required by law?
Cost centre accounting belongs to internal management accounting and as such is not required by law; unlike commercial bookkeeping under the HGB, it is not subject to any binding formal requirements. Companies are free to design its structure, level of detail and methods according to their own management needs. It nevertheless becomes indirectly relevant, for example when determining production costs for inventory valuation under Section 255 HGB, into which appropriate portions of overheads flow, or in public-sector price audits. In practice, it is de facto indispensable for reliable costing and efficiency control, even though no direct legal obligation exists.
What is the cost allocation sheet (Betriebsabrechnungsbogen, BAB)?
The Betriebsabrechnungsbogen, or BAB for short, is the classic core instrument of cost centre accounting and sets out cost types against cost centres in matrix form. Its purpose is to distribute overheads to the cost centres as accurately as possible according to their origin and then to derive overhead rates for costing. It also serves efficiency control by monitoring overheads at the place where they arise and making deviations visible. In an ERP system, this logic is no longer maintained manually in a spreadsheet but derived automatically from ongoing postings.
Which methods of internal activity allocation exist?
Three methods are commonly used to allocate auxiliary cost centres to main cost centres: the direct method (Anbauverfahren), the step-down method (Stufenleiterverfahren) and the simultaneous equation method (Gleichungsverfahren). The direct method is the simplest but does not take into account the mutual exchange of services between auxiliary cost centres. The step-down method reflects the exchange in one direction and, owing to its good ratio of effort to accuracy, is regarded as the most widely used method in practice. The simultaneous equation method settles the reciprocal exchange of services exactly in both directions and is the most accurate, but at the same time the most computationally demanding.
How does a cost centre differ from a profit centre?
A cost centre records only the costs incurred in an area and thus bears pure cost responsibility; it is measured against compliance with its cost budget. A profit centre, by contrast, is an organisational unit with profit responsibility to which both costs and revenues are assigned and which is consequently judged by its profitability. While the cost centre serves cost control and overhead allocation, the profit centre is an instrument of decentralised, profit-oriented corporate management. Many ERP systems map both concepts in parallel, so the same organisational unit can be viewed as a cost centre or as a profit centre depending on the purpose of the analysis.
From what point on, and how many, cost centres make sense for mid-sized companies?
There is no rigid threshold; in practice, department-based cost centre accounting becomes increasingly worthwhile as headcount and the variety of tasks grow, because an overall total alone does not allow an efficiency analysis of individual departments. The level of detail is decisive: too few centres provide no meaningful transparency, too many create maintenance effort without additional insight. A structure that follows the actual organisation of responsibility has proven effective, so that each centre is assigned to a responsible person. The specific number depends on industry, organisational structure and the depth of ERP customising and should be assessed against the company's own use case.