Biology Forums - Study Force

In a decentralized organization, upper managers need a way to evaluate the performance of unit managers. Based on factors under the unit manager's control, organizational units are categorized as cost centers, profit centers, or investment centers. Classify each of the following centers by placing an "X" in the appropriate column.

​	Cost	Profit	Investment
Residual income is used to evaluate unit managers	​	​	​
Purchasing department	​	​	​
Shoe department in local department store	​	​	​
Independently-operated division with sole decision-making authority for all areas	​	​	​
Manager is expected to generate a profit for unit	​	​	​
ROI is used to evaluate unit manager	​	​	​
Manager cannot set selling price for products	​	​	​
Manager is expected to invest in assets that generate profits	​	​	​
Overall profit compared to flexible budget is used to evaluate unit manager	​	​	​
Free gift-wrapping department in local department store	​	​	​

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