A cost center is a department or unit within an organization that does not directly generate revenue but incurs costs. Its primary purpose is to manage expenses and ensure efficient use of resources. Examples of cost centers include departments like human resources, IT, and customer service. Organizations track the performance of cost centers to control spending and improve efficiency. By analyzing costs, management can identify areas for potential savings and allocate resources more effectively. This helps in maintaining overall profitability while supporting the organization's operational needs.