Responsibility Centers
The Core Operation of Responsibility
Center
Input
Resources used,
measured by cost
Output
Work
Capital
Goods or
services
The products produced by a responsibility center may
be furnished either to another responsibility center
1
(as input) or to the outside marketplace (as output)
Responsibility Centers
Types of Responsibility Centers
Engineered Expense Centers
Optimal relationship
can be establish
Inputs
Work
(Dollar)
Examples
Outputs Manufacturing
function
(Physical)
2
Responsibility Centers
Types of Responsibility Centers
Discretionary Expense Centers
Optimal relationship…….
……..
..
..
cannot
be
establish
.
.
..
.
..
Outputs
Inputs
Work
(Dollar)
Examples
R&D
function
(Physical)
3
Responsibility Centers
Types of Responsibility Centers
Revenue Centers
Input do not related…….
……..
..
..
to
outputs
.
.
..
.
..
Outputs
Inputs
Work
(Dollar only for
costs directly incurred
Examples
Marketing
function
(Dollar revenue)
4
Responsibility Centers
Types of Responsibility Centers
Profit Centers
..……..
..
..
Input are related …….
..
to outputs
.
..
Outputs
Inputs
Work
(Dollar costs)
Examples
Business
unit
(Dollar profits)
5
Responsibility Centers
Types of Responsibility Centers
Investment Centers
Profits are related …….
……..
..
..
to
capital
employed
.
.
..
.
Inputs
(Dollar costs)
Examples
..
Capital
Employed
Outputs
Business
unit
(Dollar profits)
6