The following information is provided by XYZ Corporation: a. The manager of Depa
ID: 2461896 • Letter: T
Question
The following information is provided by XYZ Corporation: a. The manager of Department X is responsible for generating cash receipts and incurring costs so the corporation can make a profit. This manager is not responsible for decisions about what equipment to buy. b. The manager of Department Y is responsible for operation of the call center where customers order products from the corporation. c. Department Z produces one of the parts that is used to make the products that the corporation sells to consumers. Classify each of these departments as a cost center, a profit center, or an investment center, and explain the classification that you assigned to each department.
Explanation / Answer
solution :
a. The manager of Department X is responsible for generating cash receipts and incurring costs so the corporation can make a profit. This manager is not responsible for decisions about what equipment to buy. Department X is a Profit centre as it has responsibility of generating revenue and incurrring cost which results in Profit/Loss b. The manager of Department Y is responsible for operation of the call center where customers order products from the corporation Department Y is Investment centre as it has responsibility of overall operation of corporation. c. Department Z produces one of the parts that is used to make the products that the corporation sells to consumers. Department Z is cost centre as it has responsibility of production of parts which will be used in final product.Related Questions
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