The manager of a certain division at Alpha Manufacturing is evaluated on how efficiently the division uses equipment, buildings, and other assets to generate profits. This division is considered a(n):Multiple choice question.asset centerprofit centerinvestment centercost center
Question
The manager of a certain division at Alpha Manufacturing is evaluated on how efficiently the division uses equipment, buildings, and other assets to generate profits. This division is considered a(n):Multiple choice question.asset centerprofit centerinvestment centercost center
Solution
The division in question is considered an "investment center". This is because an investment center is a unit of a business that is responsible for generating its own revenues and profits, and for the efficient use of its assets and cash flow. It is evaluated based on the return on investment (ROI) and the efficiency in using its assets to generate profits.
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