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Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to be:


In evaluating the profit center manager, the income from operations should be compared:

to historical performance or budget

Which of the following is not a disadvantage of decentralized operation?

Top management freed from everyday tasks to do strategic planning

Which of the following would be most effective in a small owner/manager-operated business?


Responsibility accounting reports for profit centers will include

revenues, expenses, net income or loss from operations

Managers of what type of decentralized units have authority and responsibility for revenues, costs, and assets invested in the unit?

investment center

The investment turnover is the:

ratio of sales to invested assets

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n):

profit center

In a cost center, the manager has responsibility and authority for making decisions that affect:


The best measure of managerial efficiency in the use of investments in assets is:

investment turnover

Identify the formula for the rate of return on investment.

Income From Operations/Invested Assets

The costs of services charged to a profit center on the basis of its use of those services are called:

service department charges

Operating expenses directly traceable to or incurred for the sole benefit of a specific department and usually subject to the control of the department manager are termed:

direct expenses

The profit margin is the:

ratio of income from operations to sales

Which of the following is not one of the common types of responsibility centers?

revenue center

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