SkyJet Airways has three divisions, the Western Division, the Eastern Division, and the Northern Division. The manager of the Western Division had wanted to purchase replacement airplanes for the division. However, he decided against it because, although revenues would increase and the new planes would be less expensive to operate, the initial cost of the planes was quite large. What centre is most probably used to account for the Western Division?
A) a cost centre
B) a profit centre
C) an investment centre
D) a revenue centre

Question

Quizplus · Accepted Answer

The decision not to purchase replacement airplanes suggests that the Western Division is responsible for making investment decisions. Therefore, it is most likely an investment centre. Choice (A), a cost centre, would not have the authority to make investment decisions. Choice (B), a profit centre, would likely want to purchase the new planes to increase profits. Choice (D), a revenue centre, would only be responsible for generating revenue, not making investment decisions.

SkyJet Airways Has Three Divisions, the Western Division, the Eastern