Chapter 10, Problem 10.2SE

Identify types of responsibility centers (Learning Objective 1)

Identify each responsibility center as a cost center, a revenue center, a profit center, or an investment center.

1. a. Baskin-Robbins is a subsidiary of Dunkin’ Brands; Dunkin’ Brands owns and operates nearly 2,500 ice cream specialty stores in the United States.
2. b. The Legal Department of the Progressive Group of Insurance Companies prepares its budget and subsequent performance report on the basis of its expected expenses for the year.
3. c. The online division of David’s Bridal, Inc., reports both revenues and expenses.
4. d. Time Warner Inc.’s investor relations website provides operating and financial information to investors and other interested parties.
5. e. The manager of the Speedway convenience store located on Verona Road in Madison, Wisconsin, is evaluated based on the store’s revenues and expenses.
6. f. A charter airline records revenues and expenses for each airplane each month. Each airplane’s performance report shows its income, including its revenues and expenses.
7. g. The manager of the southeastern sales territory is evaluated based on a comparison of current period sales against budgeted sales.
8. h. The Bakery Department of a Kroger grocery store reports income for the current year.