Question

segment of Mega Inc., manufactures and sells blankets. The various models of blankets are produced in a single factory using stable technology. They are sold by the sales department, also located in the factory. The segment is most probably accounted for as a(n):a) Revenue centerb) Cost centerc) Investment centerd) Profit centere) None of the above

Answer 1

Answer:

d) Profit center

Explanation:

A profit center is a separate unit of a firm which incurs costs and generates revenue for the company. It is the division of the company that is in charge of earning money and creating sales. It is therefore a separate segment of the company which use of its resources to bring revenue for the company, and profits and losses of the division are estimated separately from other segments.

The importance of the profit center is that it makes it easy to identify the division within a company that least profitable and most profitable.

Therefore, the sales department of Mega Inc. which sells the various models of blankets it produces is a profit center.

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