Which statement is true? An investment center is only responsible for revenues and expenses. A profit center is evaluated using contribution margin, while an investment center is evaluated using ROI. An investment center is responsible for revenues and expenses, as well as earning a return on assets. An investment center is only responsible for its investments.

Question

Jeramiah

Business

23 August, 00:33

Which statement is true? An investment center is only responsible for revenues and expenses. A profit center is evaluated using contribution margin, while an investment center is evaluated using ROI. An investment center is responsible for revenues and expenses, as well as earning a return on assets. An investment center is only responsible for its investments.

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Answers (1)

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Lauren Forbes · Answer 1

The correct answer is An investment center is responsible for revenues and expenses, as well as earning a return on assets.

Explanation:

The investment center is a center in which the administration is responsible for sales, costs and the necessary investment in assets. When companies become decentralized, they maintain control through the responsibility centers and develop enforcement measures for each. These measures are developed to provide some direction to the administration and evaluate their execution. Because these measures can affect management behavior, they must specify to a large extent the congruence of corporate goals. In other words, they must be consistent with the company's objectives. Three performance and performance measures for investment centers will be analyzed: The Return on Investment, ROI; Residual Income, IR; and the economic value added, EVA.