What does a cost centre monitor?

A cost centre is a department or function within an organization that does not directly generate revenue but incurs costs as it performs its activities. The primary focus of a cost centre is to monitor and control the costs associated with its operations. By comparing the actual cost per unit produced against the standard costs that have been established, a cost centre can evaluate its efficiency and identify areas for improvement.

This monitoring process is crucial for budgeting and financial management, as it helps ensure that the organization operates within its intended financial constraints and minimizes wastage. Tracking cost per unit against standard cost also allows for better financial forecasting and planning, helping management to make informed decisions regarding pricing, resource allocation, and operational improvements.

The other options relate to different aspects of business performance that do not align with the specific function of a cost centre. Revenue growth pertains to income generation, employee productivity relates to the performance of staff, and long-term investments focus on capital expenditures—all of which fall outside the scope of a cost centre’s primary purpose.