JetSky Airways has three divisions, the Western Division, the Eastern Division, and the Northern Division.The manager of the Western Division had wanted to purchase replacement airplanes for the division.However, he decided against it because, although revenues would increase and the new planes would be less expensive to operate, the initial cost of the planes was quite large.The Western Division is most probably accounted for as a(n)
A) cost center.
B) investment center.
C) profit center.
D) revenue center.
E) None of these.

Question

Quizplus · Accepted Answer

The manager's consideration of the initial cost of the planes and the potential increase in revenues indicate that the Western Division is an investment center, where managers are responsible for making investment decisions that affect the division's profitability. Cost centers are responsible only for controlling costs, profit centers are responsible for generating profits, and revenue centers are responsible for generating revenues.

JetSky Airways Has Three Divisions, the Western Division, the Eastern