Assume you are the plant manager for a medium-sized company that manufactures a variety of types of telephones. The phones are produced by assembling an array of components, including electronic circuit boards that are purchased from another division within the company. Every Friday morning your corporate headquarters faxes you a production schedule indicating the type and amount of products to be produced during the following week. Thus, a major aspect of your job is meeting production schedules as efficiently as possible. Selling prices are set by senior-level management. The following income statement and supporting schedule reflect sales, product costs, and expenses for your plant during the last twelve months. As you prepare for your an- nual performance evaluation, you recall a conversation from last year in which upper management set a net income target for products manufactured in your plant. However, you believe that certain costs on the income statement are beyond your control. Also, you wonder why net income is used to evaluate your performance at the plant level.

Required A. In preparation for your meeting, identify the costs over which you have control.

B. Should your plant be evaluated as a cost center, revenue center, profit center, or investment center? Explain.