Budget center - meaning

Budget center – meaning

A budget center is a section of the organisation of the undertaking defined for the purpose of budget control. Budget center should be established for cost control and all the budgets should be related to cost centers. Budget centers will disclose the sections of the organisation where planned performance is not achieved. Budget center must be separately delimited because a separate budget has to be set with the help of the head of the department concerned. To illustrate, production manager has to be consulted for the preparation of production budget and finance manager for cash budget.