What are cost centers primarily responsible for managing?

Cost centers are primarily responsible for managing indirect costs and overhead expenses. This includes expenses that are not directly tied to the production of goods or services but are necessary for the overall operation of the organization. Cost centers play a critical role in ensuring that these expenses are monitored, controlled, and kept within budget.

In healthcare organizations, cost centers might encompass areas such as administration, facility management, or other support functions that provide necessary services but do not generate revenue directly. Effective management of cost centers allows for better financial planning and resource allocation, enhancing the overall efficiency and sustainability of the healthcare facility.

While other choices may involve some aspects of financial management, they pertain more to areas that are measured differently, such as revenue-generating activities or direct costs associated with patient care. Thus, the focus on indirect costs and overhead accurately defines the fundamental purpose of cost centers in a business context.