Responsibility Centers

Identify each of the following as a cost center, a discretionary cost center, a revenue center, a profit center, or an investment center:

a. Center A's manager is responsible for generating cash inflows and incurring costs with the goal of making money for the company. The manager has no responsibility for assets. SelectCost centerDiscretionary cost centerInvestment centerProfit centerRevenue centerItem 1

b. Center B produces a product that is not sold to an external party but transferred to another center for further processing. SelectCost centerDiscretionary cost centerInvestment centerProfit centerRevenue centerItem 2

c. Center C's manager is responsible for the telephone order operations of a large retailer. SelectCost centerDiscretionary cost centerInvestment centerProfit centerRevenue centerItem 3

d. Center D designs, produces, and sells products to external parties. The manager makes both long-term and short-term decisions. SelectCost centerDiscretionary cost centerInvestment centerProfit centerRevenue centerItem 4

e. Center E provides human resource support for the other centers in the company. SelectCost centerDiscretionary cost centerInvestment centerProfit centerRevenue centerItem 5