A Responsibility Center in Which the Department Manager Has Responsibility

question 37

Multiple Choice

A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a (n)

• A) profit center
• B) investment center
• C) volume center
• D) cost center

---

Definitions:

Contribution Margin Ratio

The proportion of sales revenue that is not consumed by variable costs and therefore contributes to covering fixed costs.

Fixed Expenses

Costs that remain constant for a period of time regardless of production levels or business activity.

Combined ROI

The total return on investment generated from a set of investments or projects, combined into a single measure.

Net Operating Income

Represents the profit a company generates from its operations, minus all operating expenses except interest and taxes.