A Profit Center can consist of a group of one or more departments that are grouped together for financial summaries such as profit and loss and balance statements.

Overhead costs can be posted to a single general ledger account and then allocated to individual profit centers based on a monthly or annual percentage. The percentage distribution is dynamic and can be entered on a monthly or annual basis. For example, multiple profit centers may share a common building and the building costs such as maintenance, utilities and insurances. These costs are then distributed to the individual profit centers based on the percent of space used within the building.

Do you wish to determine which department within your company is profitable? Do you need to identify the areas within your company that are creating a loss? If so, implement the profit center option within EBMS.

A hardware store may divide the store in the following departments:

• Tools
• Sporting equipment
• Lawn & Garden
• Automotive
• Hardware
• Building supplies, etc

The manager may identify each department as a separate profit center or he may combine a few of the departments together into a common profit center that is managed by the same person. A possible advantage of creating departments for this storeowner would be to determine which departments are the most profitable within his operation.

A farm equipment dealer may want to create the following departments:

• Farm tractor sales
• Farm tractor service
• Harvesting & cultivating equipment sales
• Harvesting & cultivating equipment service
• Lawn and garden equipment sales
• Lawn and garden equipment service

With the following Profit Centers:

• Sales Profit Center which includes all the sales departments
• Service Profit Center which includes all the service departments

Another possible use for Profit Centers would be to identify locations for companies with multiple locations as well as multiple departments within each location. A hardware storeowner may own more than one store with the departments listed in our first example.

Profit Centers can also identify entire divisions within companies, such as:

• Manufacturing division
• Service division
• Sales division

Departments could be identified as fund groups within a ministry or non-profit organization. The system allows multiple funds within the capital folder (Fund folder) and a means of separating costs or revenue by funds.