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responsibility center

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Definition of responsibility center

Responsibility Center Image 1

responsibility center

a cost object under the control of a manager



Related Terms:

cost center

a responsibility center in which the manager has
the authority to incur costs and is evaluated on the basis
of how well costs are controlled


investment center

a responsibility center in which the manager
is responsible for generating revenues and planning
and controlling expenses and has the authority to acquire,
dispose of, and use plant assets to earn the highest rate
of return feasible on those assets within the confines and
to the support of the organization’s goals


profit center

a responsibility center in which managers are responsible for generating revenues and planning and controlling all expenses


residual income

the profit earned by a responsibility center that exceeds an amount "charged" for funds committed to that center


revenue center

a responsibility center for which a manager is accountable only for the generation of revenues and has no control over setting selling prices, or budgeting or incurring costs



activity center

a segment of the production or service
process for which management wants to separately report
the costs of the activities performed


Commodities Exchange Center (CEC)

The location of five New York futures exchanges: Commodity
Exchange, Inc. (COMEX), the New York Mercantile exchange (NYMEX), the New York Cotton Exchange,
the Coffee, Sugar and Cocoa exchange (CSC), and the New York futures exchange (NYFE). common size
statement A statement in which all items are expressed as a percentage of a base figure, useful for purposes of
analyzing trends and the changing relationship between financial statement items. For example, all items in
each year's income statement could be presented as a percentage of net sales.


Responsibility Center Image 2

Distribution center

A branch warehouse containing finished goods and service
items intended for distribution directly to customers.


Illegal Immigration Reform and Immigrant Responsibility Act of 1996 (IIRIRA)

A federal Act shielding employers from liability if they have made
a good-faith effort to verify a new employee’s identity and employment eligibility.


Money center banks

Banks that raise most of their funds from the domestic and international money markets, relying less on depositors for funds.


Personal Responsibility and Work Opportunity Reconciliation Act

A federal Act requiring the reporting of new hires into a national database.


Profit center

An entity within a corporation against which both revenues and costs are
recorded. This results in a separate financial statement for each such entity, which
reveals a net profit or loss, as well as a return on any assets used by the entity.


pseudo microprofit center

a center for which a surrogate
of market value must be used to measure output revenue


real microprofit center

a center whose output has a market value


Reinvoicing center

A central financial subsidiary used by an MNC to reduce transaction exposure by having
all home country exports billed in the home currency and then reinvoiced to each operating affililate in that
affiliate's local currency. It can also be used as a netting center.


responsibility

the obligation to accomplish a task or achieve an objective


Responsibility Center Image 3

responsibility accounting system

an accounting information system for successively higher-level managers about the performance of segments or subunits under the control
of each specific manager


Responsibility centre

A division or unit of an organization for which a manager is held responsible – may be a cost centre, profit centre or investment centre.



responsibility report

a report that reflects the revenues and/or costs under the control of a particular unit manager



 

 

 

 

 

 

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