CMA Foundation · Fundamentals of Financial and Cost Accounting · Cost, Cost Centre, Cost Unit and Cost Drivers
Which statement about personal and impersonal cost centres is correct?
A personal cost centre is a person or group of persons, such as a sales manager, while an impersonal cost centre is a location or item of equipment, such as a department or machine. The distinction does not depend on whether the centre is in production.
- AA personal cost centre consists of a location or equipment, such as a lathe
- BAn impersonal cost centre consists of a person or group of persons, such as a sales manager
- CA personal cost centre consists of a person or group of persons, while an impersonal one consists of a location or equipmentCorrect
- DBoth terms refer only to production departments
Explanation
Personal cost centres are persons or groups of persons, e.g. a salesperson. Impersonal cost centres are locations or items of equipment, e.g. a department or machine. The first two options reverse the definitions, and the last is wrong because both types can occur outside production.
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