Blakefield, Inc. has grown significantly over the past decade through innovation

Question

Blakefield, Inc. has grown significantly over the past decade through innovation and acquisition. Information on several of its divisions follows.

(a) Classify each of the three divisions of Blakefield, Inc. as a cost center, a profit center, or an investment center.

(b) What type of responsibility center is the corporate headquarters group?

• The OlliePods division sells children’s recreational shoes. The division’s president is responsible for all short-run decisions on the manufacturing and sale of the shoes. • The Polyspreen division manufactures the main ingredient for the shoes produced by Olliepads. All Polyspreen output is transferred to the OlliePods division. • All long-run strategic decisions for the Olliepods and Polyspreen divisions are made by the staff at corporate headquarters. • Monk Recreation, which operates a regional chain of retail sporting goods stores, is Blakefield’s newest corporate acquisition. Blakefield managers have decided to retain all Monk Recreation employees, and all decision-making responsibility related to the sporting goods stores remains with those employees.

Explanation / Answer

a) OlliePods - Profit center

Polyspreen - Cost center

Monk Recreation - Investment center

b) Investment center

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