Responsibility Centre Flashcards
(8 cards)
1
Q
What is a Cost centre?
A
Manager controls costs only.
(hierarchy slide)
2
Q
What is a Revenue centre?
A
Controls revenues only (e.g. hotel restaurant).
3
Q
What is a Profit centre?
A
Controls both costs & revenues.
4
Q
What is an Investment centre?
A
Controls costs, revenues and assets.
5
Q
What is the formula for ROI?
A
Pre‑tax profit ÷ Net assets × 100 %; Du Pont = Margin × Asset Turnover.
6
Q
What is Residual Income (RI)?
A
Profit – (required rate × investment).
7
Q
What is Economic Value Added (EVA)?
A
NOPAT – (WACC × Net assets).
8
Q
What is a Balanced Scorecard?
A
Integrated set of Financial, Customer, Internal‑Process, Learning & Growth measures.
