ICAEW BIP · Chapter 1 · Question 7 of 10
The manager of a division is responsible for its revenues and costs and also has authority to make decisions about capital expenditure on the division's non-current assets. What type of responsibility centre is the division?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) An investment centre
Explanation
An investment centre manager controls costs, revenues and the level of investment (assets) in the centre, so performance can be measured with ROI or residual income. A profit centre manager controls revenues and costs but not investment; a cost centre manager controls costs only; a revenue centre manager is responsible for revenue only.
More Cost classification and cost behaviour MCQs
- Q9In a manufacturing business, which of the following costs would be included in the valuation of finished goods inventory under absorption…
- Q10Within the relevant range of activity, what happens to fixed cost per unit as output increases?
- Q1Oakleaf Ltd manufactures dining tables. Which of the following is a direct cost of a table?
- Q2Penrith Products incurred the following costs in a period: Direct materials £42,000 Direct labour £31,500 Direct expenses £6,300…
- Q3A company's electricity bill consists of a fixed quarterly standing charge plus a charge for each unit of electricity consumed. How would…