ACCA Applied Knowledge · Management Accounting · Performance measurement - overview
A manager of a department is held accountable for its costs only and has no authority over its revenues or the assets it uses. Which type of responsibility centre is this?
This is a cost centre, because the manager is accountable only for the costs of the department. They have no control over revenues or the asset base, which would be needed for a profit centre or an investment centre.
- ACost centreCorrect
- BRevenue centre
- CProfit centre
- DInvestment centre
Explanation
A cost centre manager is responsible only for costs incurred. A profit centre manager controls both costs and revenues, and an investment centre manager also controls capital investment decisions. Revenue centres are responsible only for revenue.
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