Asked by Francis Ogega on May 08, 2024
Verified
A responsibility centre:
A) refers to a unit of business where all the associated costs are considered as 'direct costs'.
B) refers to a unit of a business where the manager is held accountable for activities and performance.
C) is another term for 'business division'.
D) is a term applicable only to manufacturing companies.
Responsibility Centre
A unit or department within an organization, headed by a manager, who is accountable for its activities and financial performance.
Direct Costs
Expenses that can be directly attributed to the production of a specific product or service, such as materials and labor.
- Understand the role and types of responsibility centres in managing costs and performance.
Verified Answer
DP
Dylan PutmanMay 15, 2024
Final Answer :
B
Explanation :
A responsibility center is a unit or department of a business where the manager is responsible and accountable for the activities, performance, and results of that unit. This may include financial performance, operational efficiency, and other key performance indicators. It is not directly related to whether the associated costs are considered as direct or indirect costs, nor is it limited to manufacturing companies. It is also different from a business division, which may encompass multiple responsibility centers.
Learning Objectives
- Understand the role and types of responsibility centres in managing costs and performance.