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Management Control Systems
Notes 3. In profit centres, both revenues (output) and expenses (input) are measured.
4. In investment centres, the relationship between profit and investment is measured.
Figure 4.2: Types of Responsibility Centres
Example: Cost center: usually a production center or service department.
Profit center: individual departments of retail stores and branch offices of banks.
Investment center: subsidiary companies.
Self Assessment
Multiple Choice Questions:
1. What is the rate of net profit to invested capital?
(a) Profit margin (b) Return on investment
(c) Sales revenue (d) None of these
52 LOVELY PROFESSIONAL UNIVERSITY
