CA Inter P4 · Chapter 1 · Question 2 of 8
A department such as the maintenance shop, which does not work on products directly but renders services to production departments, is best described as a:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Service cost centre
Explanation
A service cost centre provides services to other cost centres (for example maintenance, stores or tool room) rather than working directly on the product. Its costs are later re-apportioned to production cost centres. Profit and investment centres are responsibility centres judged on revenue and, for investment centres, capital employed as well.
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