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Horngren's Financial & Managerial Accounting, The Managerial Chapters 6th Edition

Horngren's Financial & Managerial Accounting, The Managerial Chapters (6th Edition)

Book Edition6th Edition
Author(s)Miller-Nobles, Mattison, Matsumura
ISBN9780134486857
PublisherPearson Higher Education
SubjectAccounting
Why do Decentralized Companies Needs Responsibility Accounting?
What is a Performance Evalution System, and how is it Used?
How do Companies use Responsibility Accounting to Evaluate Performance in Cost, Revenue, and Profit Centers?
How does Performance Evaluation in Investment Centers from Other Centers?
How do Transfer Prices Affect Decentralized Companies?

Chapter 24, Why do Decentralized Companies Needs Responsibility Accounting?, Try It!, Exercise 3

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Here is a tip:

The managers of revenue and profit center differ on the covered responsibilities in terms of revenues generated and costs incurred to produce the profit. Understanding the differences should be considered.

Explanation

The men's wear department is classified as a profit center . This department monitors both revenue and the equivalent costs of each purchases.  At the end of the day, the manager shall compare generated revenues and costs against its established budgets. 

Verified Answer

  • Profit center.

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