Question

How does a cost center differ from either an investment center or a profit center? (A)...

How does a cost center differ from either an investment center or a profit center?

(A) A cost center recognizes neither revenues nor computes income.

(B) Cost centers are a much less common component of current business organizations, given the increased emphasis on value chain analysis.

(C) A cost center is always smaller than either an investment center or a profit center.

(D) None of these

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Answer #1

Question

Answer: (A) A cost center recognizes neither revenues nor computes income.

Explanation:

A cost centre is centre which is responsible for its cost a cost centre is not generate any revenue

Example of cost centre is adminstrative department such ast the IT and accounting department

Investment centre is reponsible for profit and the cost of the centre, manager of investment centre is also responsible for the investment that it earnes profit for the department.

Profit centre is department that incurs cost but also generates revenue by selling goods and services,  protit equals to revenue minus cost

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