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Cost, Discretionary Cost, Revenue, Profit and Investment Centers

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Identify each of the following as a cost center, a discretionary cost center, a revenue center, a profit center, or an investment center:
a. The manager of center A is responsible for generating cash inflows and incurring costs with the goal of making money for the company. The manager has no responsibility for assets.
b. Center B produces a product that is not sold to an external party.
c. The manager of center C is responsible for the telephone order operations of a large retailer.
d. Center D designs, produces, and sells products to external parties. The manager makes both long-term and short-term decisions.
e. Center E provides human resource support for the other centers in the company.

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This solution helps identify various items as a cost center, a discretionary cost center, a revenue center, a profit center, or an investment center.

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