Question

Discuss the components of cost to a performance evaluation. Do you feel the cost is justified?

Answer 1

Components:

(a)

A cost center is the smallest segment of the activity or area or responsibility that accumulates costs for. Cost centers are usually divisions but in several situations a agency can have multiple cost centers. Such cost centers are an organization's divisions or sub-departments in respect to which charges for expense calculation and cost management are obtained. For starters, while one foreman may supervise an assembly department, it can include many assembly lines.

(b)

A profit center is the portion of an enterprise 's operation that is liable for both income and cost and shows the benefit of a specific segment of the business. Centers for benefit was formed to assign liability to individuals and assess their efficiency. Center of benefit is different from center of loss.

(c)

Investment center is a core where not only sales and expenses, but also expenditure may be managed by a boss. The manager of any center shall be made liable for the effective utilization of the materials used in his centre. He is expected to earn a required return on the amount of assets employed in his centre. Return on investment is used as the criterion for evaluating and measuring an investment center 's results. Most major U.S. companies such as General Motors inc. practice this management discipline method.

Justification:

You would assume an company will quickly understand the benefits the project provides to support the expense and energy of this annual performance assessment procedure. I consider that to be the first company that is actively monitoring or really learning how to measure the effects of employee feedback and doing a cost-benefit study. Alternatively, companies appear simply to assess attendance levels, obedience to protocols, and report completion.

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