1. What is Cost, Profit, Investment center and why ?
Solution
Cost Center is a place where cost are being identified or segregated.it could be a division,
department etc. It is the place or division which is only responsible for cost and not for profit.
Profit Center is a place where both cost & revenue are being identified & segregated, Similarly it
could be a division, department etc. It is the place or division which is responsible for cost as
well as for revenue. They are helpful in pricing the product. Investment Center is a place where
cost ,revenue & capital investment are being identified & segregated. It could be a subsidiary
company or division. In this Responsibilty is on financial aspect. Investment center are having
responible on cost, revenue & investment i.e the person should have to be responsible in each
aspect i.e pricing , capital budgeting, financing etc