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Money Bag

Unit 3 - Finance & accounts

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Chart Increasing

Unit 1 - Introduction To Business Management

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Briefcase

Unit 2 - Human Resource Management

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Direct Hit

Unit 4 - Marketing

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Factory

Unit 5 - Operations management

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Bar-Chart

Unit 6 - Assessment

Hey there, young business enthusiast! Ready to unravel the business world&#39;s magic? Dive into the cool concept of Cost and Profit Centres! 🚀

It&#39;s like a mini-business within a big business, recording ONLY costs. Imagine your school&#39;s canteen&mdash;it incurs costs like electricity, salaries, and ingredient purchases. It&#39;s its own cost universe! 🌌

&nbsp;

Examples

<ul>
	<li>By Department: Think of your school divisions: sports, arts, academics. In businesses, we&#39;ve finance, marketing, HR, and more!</li>
	<li>By Product: Samsung, for instance, makes everything from phones to TVs. Each product = its own cost realm!</li>
	<li>By Location: KFCs and Coca-Colas are all over the world! Each location can be its own cost centre!</li>
</ul>

A bit fancier than the cost centre&mdash;it records BOTH costs and revenues. So, imagine a store where they not only have expenses (like rent and salaries) but also sell products and earn money.

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Examples

<ul>
	<li>Like Cost Centres: Based on departments, products, or locations. The twist? Revenue is also included. Toyota, for example, can pinpoint which car model is the cash cow!</li>
</ul>

<ul>
	<li>Decision Making Helpers: Managers can decide which products to axe and which to amplify. Think about discontinuing a less popular school subject in favor of a trendy one!</li>
	<li>Accountability: Remember group projects? If one section flops, it&#39;s easier to spot the slacker (or, in business, the under-performing department).</li>
	<li>Detective Mode: They help spot business issues! If one store has too many returns, it&#39;s like a detective&#39;s clue&mdash;something&#39;s up!</li>
	<li>Motivation Boosters: Imagine getting rewards for acing a test! Similarly, bonuses or promotions can be given to departments that rock their targets.</li>
	<li>Benchmarking: It&#39;s like comparing scores in a class test. Which section performed best? Who needs extra lessons?</li>
</ul>

<ul>
	<li>The Mystery of Indirect Costs: How to allocate shared costs like rent or ads? It&#39;s like figuring out who ate the most pizza slices during a group study session.</li>
	<li>Pesky External Factors: Some sections might face more competition. It&#39;s like having a tougher exam paper than another class!</li>
	<li>Centre Drama: Just as groups might compete over resources during a project, centres might battle it out for more company resources. Drama Alert! 🚨</li>
	<li>Stress Overload: Managing these centres isn&#39;t easy. Imagine being the school event head&mdash;pressure is high!</li>
</ul>

💡 Real-world Takeaway: Think of a mall. Different shops could represent different cost or profit centres of a company. A toy store may perform great during Christmas but not so well in summer. Knowing this, the mall manager could decide to introduce summer-specific toys. It&#39;s all about understanding, optimizing, and strategizing!

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Happy learning, future business mogul! 🌟📈🚀

Understanding Cost & Profit Centres: Boosting Business Efficiency

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Higher Level

Business Management HL

Unit 3 - Finance & accounts

Understanding Cost & Profit Centres: Boosting Business Efficiency

Table of content

🔍 What's a cost centre?

🔍 What's a profit centre?

Unlock the Full Content!

Unit 3 - Finance & accounts

Understanding Cost & Profit Centres: Boosting Business Efficiency

Table of content

🔍 What's a cost centre?

🔍 What's a profit centre?

Unlock the Full Content!