Question

Which of the following three statements are correct?

I. A profit center has control over both cost and revenue.
II. An investment center has control over invested funds, but not over costs and revenue.
III. A cost center has no control over sales.

Answer 1

I and III are correct.

Step-by-step explanation:

The first option is correct because a profit center is a subunit in a company in charge of all the sales operation, it controls the costs of production, sales, and revenue.

A cost center focuses on control costs and costs reduction. It does help to increase the company's profits, because the lower the costs, the greater the profit; but it doesn't directly interfere with any sales operation.