Multiple Choice QuestionThe 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.profit centerinvestment centercost centerasset center
Question
Multiple Choice QuestionThe 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.profit centerinvestment centercost centerasset center
Solution
The division is considered an "investment center". This is because an investment center is a business unit that can utilize capital to contribute to a company's profitability. It is responsible for the revenues, costs, and investments in assets. Therefore, the efficiency of using equipment, buildings, and other assets to generate profits is a key performance indicator for an investment center.
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