San Francisco Bay Consulting

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San Francisco Bay (SFB) Consulting
Simulation Requirements

1. Evaluate SFB’s current approach of treating Computer Services as a modified profit-center.
Please refer to the Appendix below that I have created for details on how monthly rental rates and usage charges are developed by Computer Services and then charged to Consulting Groups.

San Francisco Bay Consulting practical application of economic theory to business problems SF bays practice was divided into two groups – Business Consulting and Litigation Support (both relied heavily on quantitative economic analysis)

Computer services: the firm evaluated it as a modified profit center, which they called a “breakeven” center. Budget included all expenses that CS expected to
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Cost Center Definition
Unlike a profit center, a cost center is not operated with the intention of earning revenue or making a profit directly. Instead, it is a part of a business that generates costs without making money. A cost center only enables profit centers to generate revenue. For example, in a small retail business, each store, or each class of products, may operate as a profit center, while the customer service and human resources divisions operate as cost centers.

A cost centre is a department within a company that does not produce direct profit and adds to the cost of running a company. However, all cost centres perform an important job. It improves the satisfaction of customers and indirectly increases sales.[1] The manager and employees of cost centre are not accountable for its profit and investment decision but they are responsible for its cost.[2] They are liable for keeping their cost in line or below budget because cost centre does not produce directly from its activities.[3] The performance of the managers is assessed by comparing the actual expenses incurred with the budgeted expenses for the cost centre. Basically cost is the control data in the cost centre. [

Furthermore, the main objective of a cost centre is to minimize cost whereas
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