A profit center is
A)evaluated based on minimizing costs within the division
B)evaluated based on maximizing costs within the division
C)evaluated based on minimizing profits generated by the division
D)evaluated based on maximizing profits generated by the division

Question

​A profit center is
A)​evaluated based on minimizing costs within the division        
B)evaluated based on maximizing costs within the division
C)evaluated based on minimizing profits generated by the division
D)​evaluated based on maximizing profits generated by the division

Quizplus · Accepted Answer

A profit center is a business unit within a larger organization that is evaluated based on the profits it generates. Therefore, the best choice is D, which states that a profit center is evaluated based on maximizing profits generated by the division. Option A, which suggests that a profit center is evaluated based on minimizing costs within the division, is incorrect, as profit centers are not evaluated solely on the basis of minimizing costs, but rather on the profits they generate. Option B, which states that a profit center is evaluated based on maximizing costs within the division, is clearly incorrect, as this would not result in profits. Option C, which suggests that a profit center is evaluated based on minimizing profits generated by the division, is also incorrect, as this would not be a viable business strategy.

​A Profit Center Is

A Profit Center Is