Revenue Center Definition In Accounting

Often the term income is used instead of revenues.

Revenue center definition in accounting. These centers may be departments divisions or business units that have direct interaction with consumers to sell goods and services. The criterion for the evaluation of the revenue center is the. Revenue center is considered as the sales department in the company whose manager has the authority to decide on the size and direction of sales and has powers to negotiate the sales price payment terms and delivery schedule. As such it is treated as a separate business with revenues accounted for on.

Example of proft center. A revenue center is one of the five divisions of a responsibility center cost center revenue center profit center contribution center and investment center. Indirect cost is 15 000. A revenue center is the business operation responsible for generating a company s sales revenue.

Revenue from sale of product a b c are 15 000 18 000 and 25 000. Direct cost incurred for each of product a b c are 8 500 10 700 and 14 200. Fees earned from providing services and the amounts of merchandise sold. Cost centers like revenue centers only monitor costs thereby making them a counterpart to the revenue center.

Revenue center is an internal business unit whose manager is only responsible for sales achieved. Profit will be calculated for each product as they represent a separate profit center. A survey produced quarterly by the census bureau that provides estimates of total operating revenue and percentage of revenue by customer class for communication key. Under the accrual basis of accounting revenues are recorded at the time of delivering the service or the merchandise even if cash is not received at the time of delivery.