Which statement is true concerning a cost centre?
A)It incurs costs and generates revenues.
B)It only exists in companies in which costs exceed revenues.
C)It is evaluated most effectively using ROI.
D)It is usually a production or service department.

Question

Quizplus · Accepted Answer

A cost centre is a department or unit within a company that incurs costs but does not generate revenues. It is usually a production or service department, such as human resources, accounting, or IT. Options A and B are not correct, as a cost centre only incurs costs and does not generate revenues, and its existence is not dependent on whether costs exceed revenues. Option C is also not correct, as ROI is not the most effective evaluation method for a cost centre as it does not generate revenues.

Which Statement Is True Concerning a Cost Centre