Wireless Incorporated Provides a Variety of Telecommunications Services to Residential

Wireless Incorporated provides a variety of telecommunications services to residential and commercial customers from its massive campus-like headquarters in suburban Orlando. For a number of years the firm's maintenance group has been organized as a cost centre, rendering services free of charge to the company's user departments (sales, billing, accounting, marketing, research, and so forth). Requests for maintenance have grown considerably, and demand is approaching the point where quality and timeliness of services provided are becoming an issue. As a result, management is studying whether the maintenance operation should be converted from a cost centre to a profit centre, with users to be billed for services performed.
Required:
A. Differentiate between a cost centre and a profit centre. How is each of these centres evaluated?
B. What will likely happen to the number of user service requests if the company makes the switch to a profit-centre form of organization? Why?
C. Assume that a user department has requested a particular service, one that is time consuming and costly to perform. The maintenance group's actual cost incurred in providing this service is $17,800, and the user has agreed to pay $20,800 if the switch to a profit centre is made. If this case is fairly typical within the firm, which of the two forms of organization (cost centre or profit centre) will result in a more responsive, service-oriented maintenance group for Wireless? Why?