Question

Fill in the blanks with the phrase that best completes the sentence. Some phrases may be used more than once and some not at all Phrases: revenue center lower cost center investment center profit center responsibility center higher The maintenance department at the local zoo is a(n) 2. The concession stand at the local zoo is a(n) The menswear department of a department store, which is responsible for buying and selling merchandise, is an) 4. The production line at a manufacturing plant is an

Answer 1

1. Maintenance is a part of our cost. There is no direct revenue from it. Also it is recurring expense.

Hence maintenance department will be a cost center.

2. It will be a profit center. Because profit has a direct link with the concession.

3. Since both cost and sales are included hence there will be profit. So it will be a profit center.

4. Again production is a part of cost. So cost center.

5. It will be a responsibility centre because manager is responsible for the activities.

6. Here we have invested in a specific brand/ product. Hence it will be a investment center.

7. Only sales is considered hence revenue department.

8. Cost and revenue centre are at lower level because selling and other expenses comes secondary after we have enough capital and we have decided where to invest. They have more responsibility than the cost and revenue centre.

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