There Are Five Common Types of Responsibility Centers Listed Below

question 14

Essay

There are five common types of responsibility centers listed below.
Required:
Briefly describe each of the following terms and provide an example of each term.
(a) Cost Center
(b) Discretionary Cost Center
(c) Revenue Center
(d) Profit Center
(e) Investment Center

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Definitions:

Formula

A mathematical expression that calculates or represents a relationship between different variables.

Times Interest Earned Ratio

A financial metric indicating how well a company can meet its interest obligations based on its earnings before interest and taxes.

Depreciation Expense

Dividing the expenditure of a solid asset over its effective life.

EBIT

Earnings Before Interest and Taxes, a financial metric that calculates a company's profitability from operations without the effects of interest and tax expenses.