Cost, profit and investment centres
A business is split into centres so each manager answers for the right figures. Tell the three kinds apart and work out their results.
In this room: 3 tasks, 8 questions
- Cost centres3 questions
- Profit centres2 questions
- Investment centres3 questions
A business is split into parts, so that each manager answers for the figures they control. Each part is called a responsibility centre.
A cost centre is a part of the business that only has costs. Its manager is judged on keeping those costs under control.
| Cost | Cost centre | Amount |
|---|---|---|
| Oak boards | Cutting | 53,750.00 |
| Wages of the machine operators | Cutting | 7,500.00 |
| Wages of the assemblers | Assembly | 18,750.00 |
| Glue and sandpaper | Assembly | 500.00 |
| Office wages | Office | 6,400.00 |
| Telephone and stationery | Office | 450.00 |
Answer the questions below
2 more questions follow in this task.
A profit centre has income as well as costs. Its manager is judged on the profit it makes.
Fernhill Furniture's showroom sells tables to the public. In July its sales were £38,000 and its costs were £29,500.
Answer the questions below
1 more question follows in this task.
An investment centre has costs and income, and its manager also decides what is invested in assets such as machines and vans.
Its manager is judged on the profit made for each pound invested. Return on investment is profit divided by the amount invested, times 100.
Fernhill Furniture has a second workshop in Skipton with its own manager, who decides which machines to buy. This year it made a profit of £18,000 on £120,000 invested.
Answer the questions below
2 more questions follow in this task.