Question

Each Apple retails tore has several departments. Why is it useful for its management to (a) collect accounting information about each department and (b) treat each department as a profit center?

Answer 1

a)	When accounting information is collected by each department
	the following benefits accrue:
	1) Costs of each department are separately available, using which
	budgets can be prepared department-wise.
	2) It is possible to control costs department-wise and take
	remedial action.
	3) Decision making, such as dropping a department or improving
	its performance is possible as department wise figures are
	available.
b)	When each department is treated as a profit centre, the following
	advantages arise:
	1) Department wise profitability targets can be given and the
	performance can be ascertained at the end of the period.
	2) It will provide for better evaluation of departmental managers.
	3) It will help in promoting managerial skills.