Responsibility Centers. Petroleum Products, Inc., operates primarily in the Unit

Question

Responsibility Centers. Petroleum Products, Inc., operates primarily in the United States and has several segments:

Accounting and finance: responsible for recording financial information and preparing financial reports.

Human resources: responsible for hiring employees and maintaining personnel records.

Retail stores: responsible for sales prices and all costs within each store.

Advertising: responsible for promotional materials.

Production: responsible for manufacturing company products.

International operations: acts as an independent segment responsible for all facets of the business outside of the United States.

Required:

For each of the preceding segments, identify whether it is a cost center, profit center, or investment center. Explain your answer.

Explanation / Answer

Accounting and finance: responsible for recording financial information and preparing financial reports. Cost center Responsible only for costs incurred Human resources: responsible for hiring employees and maintaining personnel records. Cost center Responsible only for costs incurred Retail stores: responsible for sales prices and all costs within each store. Profit center Responsible for both revenues and costs Advertising: responsible for promotional materials. Cost center Responsible only for costs incurred Production: responsible for manufacturing company products. Cost center Responsible only for costs incurred International operations: acts as an independent segment responsible for all facets of the business outside of the United States. Investment center Responsible for investments, revenues and costs.

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