Accounting · Management Accounting
Which of the following statements correctly defines a Cost Centre and a Profit Centre?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1A Cost Centre controls assets and revenues; a Profit Centre focuses exclusively on minimisation of manufacturing overheads.
- 2A Cost Centre is a function or location for which costs are ascertained and the manager is responsible for controlling costs but not revenues; a Profit Centre is a section where the manager is responsible for both revenues and costs.✓
- 3A Cost Centre is responsible for both revenues and costs; a Profit Centre is a function for which costs are ascertained and the manager controls only costs.
- 4A Cost Centre is responsible for its own revenues and capital investments; a Profit Centre is responsible for both revenues and costs.
Correct answer
A Cost Centre is a function or location for which costs are ascertained and the manager is responsible for controlling costs but not revenues; a Profit Centre is a section where the manager is responsible for both revenues and costs.
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