Asked by Abtin Hoseini on Jul 07, 2024
Verified
Support departments within an organization such as information technology, cannot be evaluated as profit centres as they have no external sales revenues.
Profit Centres
Divisions or segments of a business with direct responsibility for generating profits.
External Sales
Sales made to customers outside of the company, as opposed to internal transactions within the company.
- Understand the variances between profit centers, investment centers, and cost centers.
Verified Answer
MM
Mohamed MahmoudJul 07, 2024
Final Answer :
False
Explanation :
Support departments can be evaluated as profit centers if the organization allocates internal charges for their services to other departments, thereby generating internal "sales" revenues.
Learning Objectives
- Understand the variances between profit centers, investment centers, and cost centers.
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