The responsibility report of Keith Paul, a manager of one of the divisions of a manufacturing company, includes profits as well as return on investment and residual income. Keith is most likely to the manager of a(n):
A)investment center.
B)profit center.
C)cost center.
D)revenue center.

Question

Quizplus · Accepted Answer

An investment center is a division or department within a company that has control over its own revenues, costs, and assets. Managers of investment centers, like Keith Paul in this scenario, are responsible for generating profits and maximizing returns on investment and residual income. Therefore, the responsibility report including these metrics indicates that Keith is probably managing an investment center. Option B) is incorrect because profit centers are responsible only for generating profits, whereas investment centers have additional responsibilities related to managing assets and returns. Option C) and D) are also incorrect because cost and revenue centers respectively are not responsible for generating profits or managing assets.

The Responsibility Report of Keith Paul, a Manager of One