In profit centers
A)Managers are difficult to evaluate because there is no simple metric of how well they performed
B)Managers typically do not have the information to run their division efficiently
C)Managers' decisions rarely affect other divisions
D)Managers typically are incentivized to run their division efficiently

Question

​In profit centers
A)​Managers are difficult to evaluate because there is no simple metric of how well they performed
B)Managers typically do not have the information to run their division efficiently
C)Managers' decisions rarely affect other divisions
D)​Managers typically are incentivized to run their division efficiently

Quizplus · Accepted Answer

Profit centers are responsible for generating revenue and earning profit for the organization. Therefore, managers of profit centers are typically incentivized to run their division efficiently, as their performance is directly linked to the financial performance of the organization. This can be done by controlling costs, increasing revenues, and maximizing profits. While evaluating the performance of managers of profit centers may not be as simple as in cost centers or revenue centers, there are generally established metrics and targets that can be used to evaluate their success. Managers of profit centers also have the information needed to run their division efficiently and their decisions can have a significant impact on the financial performance of the organization.

​In Profit Centers

In Profit Centers