Responsibility Centres - P2 Flashcards
What is a responsibility centre?
A specific manager takes responsibility for a particular aspect of the budget
He or she is then accountable for actual performance
What are the four types of responsibility centres?
Cost centre
Revenue Centre
Profit Centre
Investment Centre
What are controllable costs?
cost which can be influenced by budget holder e.g. variable and directly attributable fixed costs
What are the divisional performance measures for cost centre?
Cost per unit
Total cost
Cost variances
What are the divisional performance measures for revenue centre?
Total revenue
Revenue per unit
Revenue variances
What are the divisional performance measures for profit centre?
Total sales and market share
Profit
Sales variances
Working capital ratios
What are the divisional performance measures for Investment centre?
Return on investment
Residual income
