Distinguishing Cost Centre from Cost Unit

Steps:

• Define cost centre as a location, department, or function where costs are accumulated and controlled.
• Define cost unit as a quantifiable unit of product or service to which costs are assigned.
• Compare each option to these definitions to find the one matching cost centre.
• Select the option describing a general location for cost collection, not a specific output measure.

Why D is correct:

• Cost centres are defined in management accounting as any identifiable location, person, or department where costs are incurred and can be attributed.

Why the others are wrong:

• A limits to variable costs only, but cost centres include both fixed and variable costs.
• B describes a cost unit as a measurable output element like a single item produced.
• C refers to a cost unit by focusing on portions of products/services for cost calculation.

Final answer: D