Responsibility Centers and Financial Controls(MAnagerial class Unit 5 Db).docx

Responsibility Centers and Financial Controls(MAnagerial class Unit 5 Db).docx

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Distinguish among a cost center, a profit center, and an investment center. Provide an example of each for a multi-hospital corporation. Directly from the learning material MUSE : A cost center is responsible for costs only (e.g., a production department). A revenue center is responsible for revenues only, not costs (e.g., a sales department).A profit center is responsible for revenues and expenses (e.g., the house-wares department in a department store). An investment center is responsible for revenues, expenses, and invested capital (e.g., the branch office of a bank). A service center is responsible for providing specialized support to other units of the organization (e.g., a maintenance department). Cost Centers are: Patient Care: These cost centers are responsible for direct patient services, for example, wards or inpatient care units as a whole, or the ambulatory care center. Intermediate: These cost centers provide ancillary services to support inpatient units but are organized as separate departments. Examples include laboratory, pharmacy, and radiology. Overhead: These cost centers provide overhead support services to both patient care and intermediate cost centers.
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  • Spring '12
  • JamesKeating
  • Profit center, cost center

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