Question

9. What is a cost center? _____________________________________________________________________________________ _____________________________________________________________________________________

What is a Profit center? _____________________________________________________________________________________ _____________________________________________________________________________________

What is an investment center? _____________________________________________________________________________________ _____________________________________________________________________________________

What is management by exception: _____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

What is a Balance Scorecard?

_____________________________________________________________________________________ _____________________________________________________________________________________ _____________________________________________________________________________________

Answer 1

9. What is a cost center?

The center which does not produce any profit directly but which add cost for the running of a company. For example Cost incurred on raw material, service costs etc.

What is a Profit center?

It is treated as a separate business section of the company. The section is responsible for generating profits within an enterprise. It is possible that people who are retrenched may be playing an important role in generating profits; therefore it may be possible that after retrenchment profit center may not generate profits

What is an investment center?

The essential element of investment center is that it is regarded as unit which is measured against the use of capital. For example regions are responsible for making investment therefore; the region should be treated as Investment center

What is management by exception?

It is the practice of examining the financial and operational results of a business and bringing only those issues to the notice of management if the actual or expected amount differs from the budgeted amount.

What is a Balance Scorecard?

Balance Scorecard is used as a performance metric for identifying and improving various internal functions of a business and their related outcome. It is used to communicate what the business is trying to achieve, prioritize projects, products and services and also measure the performance against the targets.