Question

The University of Dental Health (UDH) is a state-run university focusing on the education and training of dentists, dental assistants, dental hygienists, and other dental professionals. UDH has just hired a new controller who wants to organize UDH by responsibility centers so that responsibility accounting can be implemented. The controller has asked for your assistance in identifying each of the following UDH functions as either a cost center (C) or a profit center (P).

Accounting
Bookstore
Cafeterias
Career services
Community workshops (providing continuing professional education necessary for state licensure)
Custodial services
Financial aid
Human resources
Information technology
Residence halls
Student parking lots (fee based)
University newspaper/radio station

Answer 1

The University of Dental Health (UDH)

Functions Type of Center

Accounting Cost Center

Bookstore Profit Center

Cafeterias Profit Center

Career services Cost Center

Community workshops Profit Center

(providing

continuing professional

education necessary for

state licensure)

Custodial services Cost Center

Financial aid Cost Center

Human resources Cost Center

Information technology Cost Center

Residence halls Profit Center

Student parking lots (fee based) Profit Center

University newspaper/radio station Cost Center

Step-by-step explanation:

The UDH's cost center is a department or function that does not directly contribute to its profitability but costs it money to operate its activities. A profit center, on the other hand, directly contributes to the University's profitability by generating revenue through its activities. Please, note that the dividing line is thin. The determinant factor depends on the choices and efforts made by an organization's management to commercialize some of its internal services.