A profit center:
A) Incurs costs, but does not directly generate revenues.
B) Incurs costs and directly generates revenues.
C) Has a manager who is evaluated solely on efficiency in controlling costs.
D) Incurs only indirect costs and directly generates revenues.
E) Incurs only indirect costs and generates revenues.

Question

Quizplus · Accepted Answer

A profit center is a unit within a company that incurs costs and generates revenue directly. The manager of a profit center is responsible for both controlling costs and increasing revenue, and is evaluated on the profitability of the center. Therefore, option B correctly defines a profit center.

A Profit Center