A decentralized organization will have various responsibility centers including revenue centers, whose sole purpose is to generate revenue. These centers will also incur the cost of having employees work there, but their goal is to generate sales and hit targets set by management. Of the following examples, which best represents a revenue center?
A) Housekeeping at a small hotel
B) Payroll processing at a local bank
C) Sales department at an HVAC company
D) The pharmacy at a local grocery store

Question

Quizplus · Accepted Answer

This question requires familiarity with responsibility centers and how the types of centers differentiate from one another. A revenue center will incur costs but is measured on its ability to generate revenue and hit targets. Choice C is the only choice listed that is a true revenue center. Choices A, B, and D all represent other types of centers.

A Decentralized Organization Will Have Various Responsibility Centers Including Revenue