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Different Types of Centers and Decentralization

Please help me understand these questions:

What is the difference between a "Revenue Center" and a "Profit Center"?

Discuss the Differences Between Responsibility Centers and Decentralization.

What other reasons are there to indicate decentralization is a better way of doing business?

Discuss types of control systems and how managers use these to achieve organizational goals.

Solution Preview

What is the difference between a "Revenue Center" and a "Profit Center"?

A revenue center is a center, department, or division within the company that adds to the company's revenue, based on the production and processes in that center. A profit center directly adds to the company's profit based on their activities. For example, a profit center would be production - the amount of production directly controls the profit the company is able to generate. Revenue centers include product quality control, research and development, and customer service - they are all departments that add to the generation of revenue through their activities, but they don't engage in an activity that directly makes a profit like a production division does.

Discuss the Differences Between Responsibility Centers and Decentralization.

Responsibility Centers are the centers that are responsible for certain events. By using responsibility centers, the managers in each division have to account for their own divisions, including the ...

Solution Summary

This solution discusses a revenue center, profit centers, responsibility center,s decentralization, and reasons to indicate why decentralization is better when doing business. This solution also explains types of control systems and how managers use these actions to achieve organizational goals.

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