COST ACCOUNTING
INTRODUCTION TO COST ACCOUNTING
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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A profit centre is a unit of the organisation that is operated by the management accounting department
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A profit centre is a unit of the organisation in respect of which a manager is responsible for profits under his or her control
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A profit centre is a unit of the organisation in respect of which a manager is responsible for costs under his or her control.
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A profit centre is a unit of the organisation that is required to make a profit.
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Detailed explanation-1: -What is a Profit Center? A profit center is a business unit or department within an organization that generates revenues and profits or losses. Management closely monitors the results of profit centers, since these entities are the key drivers of the total results of the parent entity.
Detailed explanation-2: -Which of the following is the best definition of a profit centre? A profit centre is a unit of the organisation in respect of which a manager is responsible for costs under his or her control.
Detailed explanation-3: -In a profit center, the manager is responsible for the revenues generated by the subunit. In addition, they are responsible for the costs and expenses incurred by the subunit in the course of normal business operations. As a result, the manager of a profit center is responsible for the profits of the subunit.
Detailed explanation-4: -A Profit Centre is a division of an organization responsible for its profits and losses. It can be a business unit, geographical area, or product line.
Detailed explanation-5: -A profit center is responsible for both revenues and expenses, which result in profits and losses. A typical profit center is a product line, for which a product manager is responsible.