WEEK 6: RESPONSIBILITY ACCOUNTING What is a cost center? A revenue center? A profit center? An...

WEEK 6: RESPONSIBILITY ACCOUNTING

What is a cost center? A revenue center? A profit center? An investment center? Please explain in the context of your own business or industry, if possible.

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Expert Solution

1. Cost division : - a cost division is a department in the business in which the cost of the business can be allocated and it may not be directly related to the company or business. The cost center only contribute indirectly to the profits of the company.

2. Revenue division : - a revenue division is like a operating unit of a business which contributes to the sales of the company or business. For example, department center each department such as cosmetic, jewellery contributes to the sales of the business thus leading to revenue.

3. Profit division : - it is a division or a branch of the company which contributes for the calculation of the profit. A profit division is responsible for its own profit generation as the manager has the decision making power.

4. Investment division : - it is an unit which is used to measure against its use of capital as opposite of cost or profit division which is measured against the raw materials or profit generating decisions.

ekkarill92 answered 11 months ago

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