What is a Cost Centre?

Hi everyone,

I'm currently working through Level 2 - Foundation Certificate. I'm absolutely loving it, I've done Bookkeeping Transactions & Controls and Using Accounting Software units so far and whilst there is a lot of information to take in I wouldn't say I've struggled, up until the Elements of Costing unit.

I just can't get my head round what a cost centre is? Can someone please explain what a cost centre is? My study material says it can be a place, person or individual item which costs are allocated to, but I don't understand where they are allocated? On a computer system? If not, where? I'm so confused!

Thank you in advance.