What is the cost fund?

also known as cost centers, cost funds are groups of costs that somehow relate to a particular product or service. Many businesses and institutions of higher learning use the cost fund to monitor expenditure related to a specific project or department. The idea of ​​the fund is to combine direct and indirect costs with a particular cost driver, which facilitates the determination of the total amount of costs associated with the operation of the department or the completion of the project.

While the exact structure of the cost fund differs, most organizations prefer to create numerical sequences, which can then be assigned to a specific project. The individual cost fund will often have up to ten digits in the sequence, with certain groups of these numbers used for the project. For example, the first four digits of the cost fund can identify the specific departments that work on the project, while the other two identify Project Same. The last four digits would concern a specific sub -Coupins of project expenditure, such as communication costs.

Creating a cost fund allows you to quickly combine costs with the correct department and project. For this reason, it is not uncommon for a business customer to provide a specific cost center or the fund number to refer to an invoice for provided goods or services. The sequence of the characters consisting of the fund provides the accounting department with the information necessary to account the cost back to the correct line item in the accounting records.

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cost fund can be used to monitor any set of required expenditure. For example, the National Sales Director could assign cost centers or pools under its jurisdiction to each of the sales regions, allowing the Based division to be divided into geographical areas. The cost funds can also be used to identify specific groups of expenditure related to a single project, CIt makes it easy to find out how much it was spent on spiritual van, what was spent on telecommunications supplies, such as conference calls, and how much project budget was spent on conducting consumer surveys.

When using the best advantage of the cost fund, it significantly simplifies the accounting task. The character sequence makes it easier to connect various expenditures with the project without having to spend a lot of time to examine how to apply a fee. As long as the accounting department knows what center has been assigned to which department or project, fees can be used quickly and efficiently.