What do you mean by Responsibility Centers ? Discuss any THREE types o

1.	What do you mean by Responsibility Centers ? Discuss any THREE types of Responsibility Centers.
Answer» A Responsibility Centre is a segment of an organization for which a particular Executive is responsible . There are THREE types of Responsibility Centre : Expense / Cost Centre : Expense / Cost centre is a responsibility centre in which inputs or expenses are measured in monetary terms , whereas outputs are measured in monetary terms . Profit Centre : A Profit Centre is a part of a business which is expected to make an identifiable contribution to organization’s profits . Investment Centre : An Investment Centre is a business unit that can utilize capital to contribute directly to a company’s profitability . Companies evaluate the performance of investment centre according to the revenue it brings in through investment in capital assets compared to the overall expenses .

What do you mean by Responsibility Centers ? Discuss any THREE types of Responsibility Centers.

Answer»

A Responsibility Centre is a segment of an organization for which a particular Executive is responsible . There are THREE types of Responsibility Centre :

Expense / Cost Centre : Expense / Cost centre is a responsibility centre in which inputs or expenses are measured in monetary terms , whereas outputs are measured in monetary terms .
Profit Centre : A Profit Centre is a part of a business which is expected to make an identifiable contribution to organization’s profits .
Investment Centre : An Investment Centre is a business unit that can utilize capital to contribute directly to a company’s profitability . Companies evaluate the performance of investment centre according to the revenue it brings in through investment in capital assets compared to the overall expenses .

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What do you mean by Responsibility Centers ? Discuss any THREE types of Responsibility Centers.

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