Basic Accounting Knowledge: Profit Center
A profit center usually refers to a manager who has the right to make decisions on the supply of resources and select the organizational units of the market, such as those within the company. Cause Department.
Generally speaking, the profit center should sell most of its products to the outside.
Customer
And for most raw materials,
commodity
And services have the right to choose the source of supply.
In the profit center, because the manager has no responsibility and power to decide the investment level of the assets of the center, profit is the only best performance measurement standard.
But at the same time, these profit figures also need to add a lot of non-financial indicators of short-term performance.
The profit measured by appropriate methods is a short-term indicator for determining the ability of the central managers to use their resources and other input elements to create value.
In the profit center, managers have almost all of the decision-making power, and can be evaluated according to profit indicators.
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