A cost center is a unit of the company (department, store, team, project) to which the expenses it generates are assigned, to know what it costs, who is responsible and how it compares with its budget.
What it includes
The center's direct expenses (its team's payroll, its suppliers, its licences) and, if the group decides so, a share of common expenses allocated with a key (square metres, headcount, revenue). Each center has an owner and its own budget.
Example with numbers
The Marketing cost center has 4 people (payroll 20,000 a month), agencies 15,000 and tools 3,000: direct spend 38,000. It is allocated 10% of office expenses (2,000). Center total: 40,000 against a budget of 36,000, a +4,000 variance that the owner explains, not finance.
How Fibady does it
The ERP's cost centers arrive as an analytical dimension with every entry, and the budget is loaded by area so each owner compares actual and planned for their center. In a group, the same center (for example, IT) is seen per entity and consolidated.