ACCA Applied Skills · Performance Management · Performance analysis
Which type of responsibility centre is a department whose manager is accountable for both revenues and costs, and also for decisions on investment in non-current assets?
This is an investment centre. Its manager controls costs, revenues and also investment in assets, so performance is assessed by measures relating profit to capital employed, such as return on investment or residual income. A profit centre lacks control over investment decisions.
- ACost centre
- BRevenue centre
- CProfit centre
- DInvestment centreCorrect
Explanation
An investment centre manager controls costs, revenues and the level of investment in assets, so performance is judged against capital employed (ROI or residual income). A profit centre manager controls revenues and costs but not investment, so option C is wrong.
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