A cost center
A)is responsible for generating profit.
B)should be evaluated using return on investment to best motivate managers.
C)places its managers responsible for all costs under their control.
D)requires a set of performance measures that are more complex than those for an investment center.

Question

Quizplus · Accepted Answer

A cost center is responsible for controlling and minimizing costs, so its managers are accountable for all costs under their control. However, they are not responsible for generating profit or calculating return on investment, so options A and B are incorrect. The performance measures for a cost center can be relatively simple, as they can focus on cost reduction and efficiency improvements, making option D incorrect.

A Cost Center