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Operating expenses incurred by support departments are indirect expenses to a profit center.
Operating Expenses
Costs incurred during the normal functioning of a business, excluding the cost of goods sold.
Support Departments
Units within an organization that provide essential services to other departments or divisions but do not directly produce revenue.
Profit Center
A decentralized unit in which the manager has the responsibility and the authority to make decisions that affect both costs and revenues (and thus profits).
- Recognize the concept of direct and indirect operating expenses and their relevance to specific departments or centers.
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Learning Objectives
- Recognize the concept of direct and indirect operating expenses and their relevance to specific departments or centers.
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