A Responsibility Center for Which a Separate Measure of Revenues

question 111

Multiple Choice

A responsibility center for which a separate measure of revenues and/or costs is obtained is called an) _____.

• A)accounting center
• B)segment
• C)contribution center
• D)quality control center

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Definitions:

Marginal Benefits

The bonus satisfaction or utility acquired from consuming an additional unit of a product or service.

Marginal Costs

The increase in expense associated with manufacturing an additional unit of a product or service.

Moral Hazard

A situation in which one party engages in risky behavior or fails to act in good faith because the negative consequences are borne by another party.

Coase Theorem

An economic theory that suggests that if trade in an externality is possible and there are no transaction costs, parties can negotiate solutions to conflict that lead to an efficient outcome regardless of the initial allocation of property.