Published by:
Harvard Business Publishing
Length: 11 pages
Topics:
Control systems; Profit centers
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Abstract
Profit centers effectively analyze a segment of a company''s business and motivate managers; however, they present implementation problems. Profit centers characteristically employ over-simplified accounting procedures. The most important criteria to use in selecting from the variety of financial measurements is company strategy and structure. The managers and their companies need a unified goal. Organizations of simple structure may use traditional cost centers, marketing profit centers, production profit centers, and multiple profit centers. It is the responsibility of the management controller to synthesize the characteristics of the business and choose the appropriate financial objective.
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Abstract
Profit centers effectively analyze a segment of a company''s business and motivate managers; however, they present implementation problems. Profit centers characteristically employ over-simplified accounting procedures. The most important criteria to use in selecting from the variety of financial measurements is company strategy and structure. The managers and their companies need a unified goal. Organizations of simple structure may use traditional cost centers, marketing profit centers, production profit centers, and multiple profit centers. It is the responsibility of the management controller to synthesize the characteristics of the business and choose the appropriate financial objective.