Assigning responsibilities in responsibility centers

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Assigning responsibilities in various responsibility centers.

For each responsibility center described below, indicate the type of responsibility level that is most appropriate, i.e. is it a cost center, a revenue center, a profit center, or an investment center. If more than one answer is appropriate for a given description, explain why that situation exists.

A. A division sales office where the sales manager controls the acquisition of new customers, but has no authority to offer price discounts to customers. Advertising is handled by the corporate marketing departments, but the sales office controls a SMALL operating budget for entertainment expenses.

B. A manufacturing plant that has no responsibility for sales.

C. Divisions of a corporation that handles a single product line and whose division manager has the authority to purchase manufacturing equipment, advertise, and make decisions about changes to the product line. All legal matters are handled by the corporate office. Also, computer systems are centralized and charges to the divisions based on actual usage.

D. A manufacturing plant that has responsibility for sales of the product it manufactures.

E. The corporate accounting department that controls the majority of its operating budget including salaries, but not including office rent.

Reference no: EM1314366

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