A segment of Mega Inc., manufactures and sells blankets.The various models of blankets are produced in a single factory using stable technology.They are sold by the sales department, also located in the factory.The segment is most probably accounted for as a(n)
A) cost center.
B) revenue center.
C) profit center.
D) investment center.
E) None of these.

Question

Quizplus · Accepted Answer

Since the segment both generates revenue through blanket sales and incurs costs through production, it can be considered both a revenue and cost center. However, as it is able to generate profits through its operations, it is most likely accounted for as a profit center. An investment center, on the other hand, would have the authority to make investment decisions and would be responsible for achieving a certain level of return on investment.

A Segment of Mega Inc