Discretionary cost center and revenue center


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

a. The manager of center A 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.

b. Center B produces a product that is not sold to an external party.

c. The manager of center C is responsible for the telephone order operations of a large retailer.

d. Center D designs, produces, and sells products to external parties. The manager makes both long-term and short-term decisions.

e. Center E provides human resource support for the other centers in the company.

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Accounting Basics: Discretionary cost center and revenue center
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