A responsibility center which measures performance in terms of the difference between revenues (which measure production)and expenditures (which measure resources)is a(an)
A)investment center.
B)revenue center.
C)expense center.
D)profit center.
E)standard cost center.

Question

Quizplus · Accepted Answer

A profit center is responsible for generating revenues and controlling expenses to maximize profits. Therefore, it measures performance in terms of the difference between revenues (which measure production) and expenditures (which measure resources). Investment centers are responsible for generating a return on investment, revenue centers are responsible for generating revenues, expense centers are responsible for controlling expenses, and standard cost centers are responsible for measuring and controlling costs.

A Responsibility Center Which Measures Performance in Terms of the Difference