Are all facility departments revenue centers or cost centers?

• A. Yes
• B. No
• C. Some
• D. Not revenue centers but cost centers

Answer: (D)

Understanding how departments are classified helps you see what gets measured and why. Facility departments are typically viewed as cost centers because their main function is to support operations by providing services such as maintenance, utilities, security, and administrative support. These units incur costs and their performance is judged by how well they control those costs and deliver reliable services, not by how much revenue they bring in.

A revenue center, by contrast, is evaluated on the revenue it generates from selling goods or services. Since facility departments usually don’t directly sell something to generate sales, they don’t have a primary objective of earning revenue. There can be cases where a facilities unit charges external or internal customers for specific services and thus brings in revenue, which could blur the line toward revenue-generating activity. But in the typical setup, the standard classification is that facility departments are cost centers, not revenue centers.