acc wk 8 assi - Responsibility Centers What is a...

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Responsibility Centers
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What is a Responsibility Center? It’s a department in a company that has control over the costs, revenues, and investment funds. There are 3 basic Responsibility Centers Cost Center Profit Center Investment Center
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Cost Center Incurs cost and expenses but does not directly generate revenues. It consists of 2 departments: production and service. Production would be the machinery or assembly line of a company. Services is human services or the maintenance part of the company.
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Cost Center (cont.) A manager’s performance is based on his or her ability to meet budget goals for controllable costs. Responsibility reports compare the actual controllable costs with the flexible budgeted data.
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Profit Center Incurs costs, expenses and generates revenues. There are two individual departments of a company.
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Profit Center (cont.) An example would be Target Electronics Department Clothing Department Grocery Department Jewelry Department
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Profit Center (cont.) The manager’s performance is based on
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acc wk 8 assi - Responsibility Centers What is a...

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