Responsibility centers
In one sentenceParts of the business in which each manager is held accountable for what they can control: cost, revenue, profit or investment.
Simply put
The idea is simple: do not hold anyone accountable for what they do not control. The warehouse manager is accountable for costs, the sales manager for revenue, and the branch manager for profit.
You split the budget across these centers, then compare actual with budget for each center, so it shows where the variance came from and who is responsible for it.
Example
A chain of stores treats the main warehouse as a cost center, the online sales team as a revenue center, each branch as a profit center, and senior management, which decides on opening branches, as an investment center.
Don't confuse it with
Cost centerA cost center is one type of responsibility center, held accountable for costs only.
in FullScreen ERP
General accounts supports cost centers so you can see the profitability of each branch, project or department. General accounts