What is the difference between a cost , a profit center and an investment center

Question

What is the difference between a cost , a profit center and an investment center?
It only applies to service companies
It concerns the level of decision making and control the manager has
It is relevant only to nsnufacturing companies
It varies based on the type of product delivery Ms and services provided to customers What is the difference between a cost , a profit center and an investment center?
It only applies to service companies
It concerns the level of decision making and control the manager has
It is relevant only to nsnufacturing companies
It varies based on the type of product delivery Ms and services provided to customers
It only applies to service companies
It concerns the level of decision making and control the manager has
It is relevant only to nsnufacturing companies
It varies based on the type of product delivery Ms and services provided to customers

Explanation / Answer

What is the difference between a cost center, a profit center and an investment center ?

Answer : It concerns the level of decision making and control the manager has.

Cost center, profit center and investment center are associated with responsibility accounting.

The manager of a cost center would be resposible for costs only.

The manager of a profit center would be resonsible for revenues as well as expenses.

The manager of an investment center is resonsible not only for profit, but also for return on investment.

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