UNIT 5 DISCUSSION BOARD Essay Example | Topics and Well Written Essays - 500 words

UNIT 5 DISCUSSION BOARD - Essay Example Here the cost center is a responsibility center whose employees control costs but do not control its revenues or investment level. On the other hand a revenue center is a responsibility center whose members control revenues but do not control the cost of the product or service they sell or the level of investment in the responsibility center. Thirdly there is a profit center which is a responsibility center whose manager and other employees control both the revenues and the costs of the product or service they sell or deliver. Lastly, we come up to the investment center that is a responsibility center whose manager and other employees control the revenues, costs, and the level of investment in the responsibility center. If we take into account the policies incorporated by Howard Works ltd the scene could be easily clarified. In Howard Works Ltd the four aspects of Responsibility Centers are dealt in the most efficient manner. Cost centers, Revenue centers, Profit centers and Investment centers are in able hand and they are evaluated in every possible way. In Howard Works Ltd Responsibility Centers are evaluated in regular interval by the dint of underlying the accounting classifications of responsibility centers is the concept of controllability. Moreover, the controllability principle asserts that people should only be held accountable for results that they can control. Though it should be remembered that, according to Rick Dobson, the CEO of Howard Works Ltd, â€Å"it is often difficult to apply the controllability principle†. (Hobbs, 84) Rick Dobson also pointed out some problems associated with controllability; according to him the problem stays with jointly earned revenues and/or jointl y incurred costs. He also pointed out the problem regarding intricate, and often arbitrary, accounting procedures. But with management principals applied in a more perfect manner and with more vigor it is expected that these problems would gradually