[APM 필수지식] Types of Responsibility Centers

Types of responsilibty centers

• Cost center
• Profit center
• Investment center

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1. Cost center

Evaluate on his/her (manager) ability to control costs incurred by his/her department. Managers make decisions every day that affect the company's operations. It incurs costs but does not generate any revenues. This center is acting as supporting center for primary business activities. For example, IT departments, human resources.

 

 

 

2. Profit center

Evaluate on his/her (manager) ability to control costs and their ability to generate revenues and profits (revenue - expenses). It incurs costs but also earns revenues by selling its goods and services to customers

 

 

 

3. Investment center

Evaluate on his/her (manager) ability to control costs, and generate revenue and rate of return. It also has control over investments to earn profits for its departments.