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Responsibility center - Responsibility Center Presentation...

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Responsibility Center Presentation Ty Harman 10/16/2011 ACC220 Heath Braby
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Introduction Responsible reporting systems for each level of the companies origination The lowest level of responsibility Higher level can obtain lower level reports Reports allow managers to compare Three basic types of responsibility centers
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Cost Center Cost center incurs cost, expenses Does not directly generate revenue Mangers are allowed to incur cost Evaluated on ability to control cost Negative impact on business profits
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Cost Center Budget Only controllable cost are included Production departments or service departments No distinction made between variable and fixed Upper management can obtain reports Compare actual to flexible budget
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Profit Center Incurs cost, expenses and generates revenue Managers are judged on profitability, cost Managers have to drive sales revenue Individual departments treated like a separate business Examples, furniture, different department in banking
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