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Cost Center vs Internal Order
| Aspect | Cost Center | Internal Order |
|---|---|---|
| What is it?(Imp) | is a place or team where money is spent directly. | is a temporary project or special task that needs its own budget. |
| Why use it? | To see if a part of the company is using money well. | To keep track of money for a specific job or project. |
| How long does it last? | It’s usually there all the time. | It’s just for a certain project, then it’s closed. |
| How big is it? | It’s a part of the company, like a department. | It can involve different parts of the company, depending on the project. |
| Who’s responsible? | The manager of the area is in charge of keeping costs down. | The person in charge of the project makes sure money is spent wisely. |
| Hierarchy(Imp) | Cost Center has a hierarchy called cost center hierarchy representing the organization’s structure. | No hierarchy, each order is independent and stands alone. |
| Planning Basis(Imp) | Planning is done on a fiscal year basis. | Planning can be done on a fiscal year basis or an overall basis, depending on the project’s duration. |
| Examples(Imp) | Production department, HR team, IT department. | Launching a new product, renovating a building, marketing for an event. |