Responsibility Centres Flashcards
Segments of a business that managers are accountable for are called …….. ?
Responsibility centre’s
What are the four most common responsibility centres in businesses ?
- Cost centre
- Profit centre
- Revenue centre
- Investment centre
Which responsibility centre costs a business money but does not generate money of its own ?
Cost centre
What are cost centres ?
Functions and departments within an organisation where costs can be charged
Which responsibility centre has both costs and revenue ?
Profit centre
Why can many cost centres not become profit centres ?
Because they provide support services within a business so dont have any significant revenue
What formula do profit centres use ?
Revenue - Costs = Profit centre
What is the revenue centre responsible for ?
Generating revenue for the business
Shop departments, restaurants & coffee shops are all examples of which responsibility centre ?
Revenue centre
What do investment centres comapre the amount of money invested into the centre with ?
The profit made by the centre
What formula do investment centres use ?
(profit / investment) x 100 = return on investment
