The security department that is evaluated on its ability to control costs when the company compares actual costs to budget costs at a department store chain may be classified as a(n)
A)cost center.
B)investment center.
C)profit center.
D)revenue center.

Question

Quizplus · Accepted Answer

A cost center is a department or unit within an organization that is evaluated based on its ability to control costs. In this scenario, the security department is being evaluated based on its ability to control costs when the company compares actual costs to budget costs. Therefore, the security department can be classified as a cost center. Investment centers are evaluated based on their ability to generate profits and manage capital investments, profit centers are evaluated based on their ability to generate profits, and revenue centers are evaluated based on their ability to generate revenue. None of these classifications fit the scenario presented in the question.

The Security Department That Is Evaluated on Its Ability to Control