Question

Which of the following is correct regarding responsibility​ centers? A. If a manager is held responsible for generating​ revenue, controlling​ costs, and efficiently investing​ assets, then his division is considered a profit center and an investment center. B. Traceable​ costs, as used in a responsibility accounting​ system, only consists of variable costs. C. Common fixed costs should be allocated to a segment and used to evaluate the​ segment’s performance. D. Responsibility centers are primarily utilized in companies with centralized operations.

Answer 1

Answer:A. If a Manager is held responsible for generating revenue, controlling cost and efficiently investing assets, then this division his considered a profit center and an investment center.

Explanation:

Profit is the difference between revenue and the various cost associated with a firm. Each of the element of cost and revenue can be act upon independently but the outcome each of them will have a dependent effect on the profit, invariably the control of the elements of revenue and cost makes it a profit center.

The Independence in the efficient investment of asset which makes the department to determine when, how and where to invest the asset qualified it an investment center.