Answer:
False
Explanation:
Performance evaluation forms the basis of the control system. Comparing actual costs, revenues and investments with budgetary expenses, income and investments from time to time can help management make decisions about future allocations. In order to determine the level of performance, it is necessary to evaluate the performance of all the responsibility centers (e.g centers, profit centers and investment centers). The best way to motivate managers to achieve the desired performance level is to measure their performance compared to budgetary results.
The cost center is the smallest part of the area or area where the activity or costs are collected. Generally, cost centers are subdivisions, but in some cases there may be more than one expense center. These cost centers are departments or divisions of an organization where costs are collected for cost identification and cost control. For example, a master can control a mounting department, but there may be several assembly lines. Sometimes each mounting line is considered a separate cost center with its assistant master. The price center may be a place, such as a department, warehouse or sales area, or a car, a vehicle or a person, for example, a seller, a master.
Determining the appropriate cost center is crucial for determining and controlling cost. The manager of a cost center is responsible for controlling the cost of the cost center. This ensures that all such costs are collected where the overall recovery base can be used. Price Center Types:
(i) Individual and non-individual cost centers:
The center of personal expenses is a center of one person or a group of people. On the other hand, the extraordinary cost consists of a central machine, department or factory.
(ii) Operation and Process Cost Centers:
Cost of operation consists of people and / or machines performing the same type of operations center. On the other hand, a center with continuous operations is called a cost center.
(iii) Product and Service Cost Centers:
The product center is a center where a product passes and is generally appropriate for a product department. In these centers, raw materials are turned into finished products. The service center is a department or center that generates direct and indirect costs but does not work directly on the products. Such centers are useful for ensuring that production operations are carried out smoothly and serve the production centers. The number of price centers varies from organization to organization.
