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Hi
What is the Major Difference Between Profit Center and
Business Area
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Answer Posted / satish madhu
Profit Center Accounting:
If any product has to move from different stages from raw
materials to semi finished goods and to finished goods the
cost of production and the value addition to that product
will differ. To analyse this cost of product and the
profits from one stage to another PCA is used.
Business Area.
As pointed above as there are different stages of prodction
that a product moves to turn as finish product if a company
has different business of dealt with different business,
the profitability would be arrived business areawise.
Example:
Ruchi Industries Limited has different business:
a. Soya food trading
b. Bakery food trading
c. Oil business
d. Infrastucture business etc...
It is true that these are used for internal reporting.
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