ECONOMICS

Detailed explanation-1: -Profit center managers are responsible for the cost incurred and profit generated by the unit. However, they don’t have the power to decide the investments. The investment division manager is held responsible for the cost, revenue, and acquisitions in assets.

Detailed explanation-2: -A segment responsible for costs and revenues is called a profit center. A segment responsible for costs, revenues, and investment in assets is called an investment center. Performance measures used to evaluate managers depend on the type of responsibility center being managed.

Detailed explanation-3: -An investment center is a center that is responsible for its own revenues, expenses, and assets and manages its own financial statements which are typically a balance sheet and an income statement.

Detailed explanation-4: -Definition. A cost centre is a company’s department that supervises all the costs of the company. A profit centre is a company’s department that is responsible for the profits of the company. Responsibilities. Reducing costs and effective cost control within the organisation.

Detailed explanation-5: -Profit center is a division or a branch of a company that is considered to be a standalone entity that is responsible for making revenue and cost related decisions. Investment center is a profit center that is responsible for making investment decisions in addition to revenue and cost related decisions.