Responsible centre.ppt

Responsible centre.ppt

• 1.
  WHAT IS RESPONSIBLECENTRE? EXPLAIN THE TYPES OF RESPONSIBLE CENTERS?
• 2.
  RESPONSIBLE CENTRE Types ofresponsible centers
• 3.
  RESPONSIBLE CENTRE Responsible centermay defined as an area of responsibility which is controlled by an individual . A responsible center is an activity such as department over which a manager exercises responsibility .responsible areas my be of departments , product lines , territories or any other type of identifiable unit or combination of units.
• 4.
  TYPES OF RESPONSIBLECENTERS The following are the various types of responsible centers . They are: 1.Cost center 2.Revenue center 3.Profit center 4.Investment center
• 5.
  1.COST CENTER  Acost or expense center is a segment of an organization in which the managers are responsible for the cost incurred in that segment but not the revenues.  Responsibility in a cost center is restricted to cost.  Cost center managers have control over some or all of the costs in their segment of business ,but not over revenues.
• 6.
  1.COST CENTER  Ifthe cost is less than the estimated cost that the manager should be responsible other wise irresponsible.  example: Actual cost Standard cost variance 11000 10000 +1000(A) 9000 10000 -1000(F)
• 7.
  2.REVENUE CENTER  Revenuecenter is a segment of organization which is primarily responsible for generating the sales revenue.  Revenue center manager does not have any control over the cost.  Investment in assets , but usually has control over some of the marketing department.  The performance of a revenue center is evaluated by comparing the actual revenue with budgeted revenue and actual marketing expenses with budgeted marketing expenses .
• 8.
  2.REVENUE CENTER  example: Actualrevenue Budgeted revenue Variance 11000 10000 +1000(F) 9000 10000 -1000(A)
• 9.
  3.PROFIT CENTER  Profitcenter is a segment of an organization whose manger is responsible for both revenues and costs.  Managers of profit centers have control over both costs and revenues.  A division of the company which produces and markets the products may be called as profit center.
• 10.
  3.PROFIT CENTER  Theperformance of the profit center is evaluated in terms of whether the center has achieved its budgeted profit.  Example: Actual profit Budgeted profit Variance 100000 80000 +20000(F) 80000 100000 -20000(A)
• 11.
  4.INVESTMENT CENTER  Aninvestment center is responsible for both profits and investments.  The investment center manger has control over the amounts invested in the center’s asset.  The manager of an investment center has more authority and responsibility than the manager of either a cost center or a profit center.
• 12.
  4.INVESTMENT CENTER  Besidescontrolling costs and revenues, has investment responsibility too.  Investment on asset responsibility means the authority to buy , sell and use divisional assets.
• 13.
  THANKING YOU