A Cost Center Is a Unit of a Business That

question 117

Multiple Choice

A cost center is a unit of a business that incurs costs without directly generating revenues.All of the following are considered cost centers except:

• A)Accounting department at Warner Bros.
• B)Purchasing department at Best Buy.
• C)Research department at Microsoft.
• D)Advertising department at Hertz.
• E)Juice division at Coca Cola.

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Definitions:

Operating Cycle

The duration of time from the purchase of inventory to the collection of receivables from sales, outlining how long it takes for a company to turn investments in inventory into cash.

Safety Stocks

Additional quantities of stock kept in inventory to reduce the risk of stockouts caused by variations in supply or demand.

Average Inventory

Average Inventory is a calculation used to estimate the value or quantity of inventory that a business holds over a specific period, often used for analyzing inventory efficiency.

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used to assess the profitability of an investment.