Budget centre
A budget centre is the section of an organisation for which a separate budget is prepared and one named manager is held accountable, the budgeting counterpart of a responsibility centre used for performance evaluation.
See it move
A factory's moulding-and-finishing operation is one responsibility centre run by one production manager, but for budgeting it is split into two budget centres: moulding at €140,000 and finishing at €95,000. Together they make up the production manager's €235,000 responsibility-centre budget, with each supervisor accountable for their own smaller figure.
Check yourself
A production manager's responsibility centre is budgeted through three separate budget centres for control purposes: assembly €60,000, packaging €25,000, and quality control €15,000. What is the total budget for the production manager's responsibility centre?