In Tally, a cost centre is used to track expenses or costs related to a purchase, sales, or manufacture. When we say cost centre, we're referring to the location where expenses are allocated.
Accounting, human resources, information technology, maintenance, and research and development are examples of cost centres. A cost centre is a subset of a department that can be defined at a lower level. A specific job role, machine, or assembly line could be involved.
Production cost centres are the places where items are made or processed. One assembly area is an example of this.
Service cost centres are those that provide services to other cost centres. The personnel department or the canteen are two examples of this.
Cost centres are CO objects that are used for internal management reporting, whereas GL is a FI object that is used for external reporting.