The manager of the X division of Spooner and Fry plc is responsible for controlling costs within her division.Selling prices and sales mix strategies are determined by the centralized sales and marketing department, and capital investment decisions are made by a committee of head office managers. X division can be best described as a:
A)Investment centre
B)Contribution centre
C)Cost centre
D)Profit centre

Question

Quizplus · Accepted Answer

The X division manager is responsible for controlling costs within the division. This suggests that the main focus of the division is on managing costs rather than generating profits. Additionally, the selling prices and sales mix strategies are determined by the centralized sales and marketing department, indicating that the X division does not have control over revenue generation. The capital investment decisions are made by a committee of head office managers, further reinforcing the idea that the X division is not responsible for generating profits, but rather for managing costs. Therefore, the best description of X division is that it is a cost centre.

The Manager of the X Division of Spooner and Fry