Economics · Responsibility Accounting
The Wealth Management Unit (WMU) of Epsilon Bank uses Responsibility Accounting. The unit is structured into three Responsibility Centres (RCs): RC 1 (Investment Advisory), RC 2 (Portfolio Management), and RC 3 (Operational Support). RC 1 and RC 2 are designated as Profit Centres, while RC 3 is a Cost Centre. For the financial year 2025, the following metrics were recorded: - RC 1: Revenue of INR 50 Crore, controllable costs of INR 20 Crore. - RC 2: Revenue of INR 80 Crore, controllable costs of INR 30 Crore. - RC 3: Controllable costs of INR 15 Crore. - Non-controllable, allocated Head Office overhead for the entire WMU is INR 10 Crore. What is the total Controllable Profit of the Wealth Management Unit (WMU), and what is the primary purpose of classifying RC 3 as a Cost Centre under Responsibility Accounting?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
Share:
- 1Total Controllable Profit is INR 95 Crore; RC 3 is a Cost Centre to assign all non-controllable costs accurately.
- 2Total Controllable Profit is INR 95 Crore; RC 3 is a Cost Centre to facilitate the evaluation of the manager based solely on cost containment targets.
- 3Total Controllable Profit is INR 75 Crore; RC 3 is a Cost Centre to simplify the calculation of Return on Investment (ROI) for the entire WMU.
- 4Total Controllable Profit is INR 65 Crore; RC 3 is a Cost Centre to ensure its manager is held accountable for cost containment without the ambiguity of revenue generation.✓
Correct answer
Total Controllable Profit is INR 65 Crore; RC 3 is a Cost Centre to ensure its manager is held accountable for cost containment without the ambiguity of revenue generation.
Download Single Question PDF
Save this question and verified answer as a clean study sheet with live clickable link.
👥
Share with Friends & Study Groups
Challenge your peer aspirants on WhatsApp or Telegram to solve this question!
Online Test Series
Start Free Mock Test →Preparing for Economics?
Practice full-length mock tests with real exam timers, instant score analysis, and all-India ranking.
Chapter Practice
Practice Responsibility Accounting MCQs →Want more practice questions on Responsibility Accounting?
Solve complete topic-wise tests with detailed solutions on GkGet.
Related Practice Questions
Recommended practice questions in Economics · Responsibility Accounting