What is a profit center and how is its performance evaluated?

Profit Center

A division or segment of a company that is responsible for generating its own revenue and profit, distinct from cost centers.

Performance Evaluation

The process of assessing the execution of activities and tasks by employees or departments against set standards or objectives to inform management decisions.

Contrast the roles of cost centers and profit centers and their repercussions on the structure of the organization and the evaluation of its performance.

Verified Answer

Jonathan MendezJul 08, 2024

Final Answer :

A profit center incurs costs and generates revenues.Profit center managers are judged on their abilities to generate revenues in excess of the department's costs.

Learning Objectives

Contrast the roles of cost centers and profit centers and their repercussions on the structure of the organization and the evaluation of its performance.

What is a profit center and how is its performance evaluated?

Definitions

Learning Objectives

Learning Objectives

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