Which of the following is a measure of a managers performance working in a profit center ✅ Đầy đủ
Thủ Thuật Hướng dẫn Which of the following is a measure of a managers performance working in a profit center Chi Tiết
Bùi Trung Minh Trí đang tìm kiếm từ khóa Which of the following is a measure of a managers performance working in a profit center được Update vào lúc : 2022-10-31 20:20:12 . Với phương châm chia sẻ Thủ Thuật về trong nội dung bài viết một cách Chi Tiết Mới Nhất. Nếu sau khi đọc Post vẫn ko hiểu thì hoàn toàn có thể lại Comment ở cuối bài để Ad lý giải và hướng dẫn lại nha.What Is a Profit Center?
A profit center is a branch or division of a company that directly adds or is expected to add to the entire organization's bottom line. It is treated as a separate, standalone business, responsible for generating its revenues and earnings. Its profits and losses are calculated separately from other areas of the business. Peter Drucker coined the term "profit center" in 1945.
Nội dung chính Show- What Is a Profit Center? Key Takeaways: Understanding Profit Centers
Profit Centers vs. Cost Centers Real World Examples of Profit Centers What is the best measure of manager performance for a profit center?Which of the following is a measure of performance for the manager of an investment center?How is performance evaluated for a profit center?What is a profit center manager?
Key Takeaways:
- A profit center is a branch or division of a company that directly adds to the corporation's bottom line profitability.A profit center is treated as a separate business, with revenues accounted for on a stand alone basis.The opposite of a profit center is a cost center, a corporate division, or department that does not generate
revenue.
Understanding Profit Centers
Profit centers are crucial to determining which units are the most and the least profitable within an organization. They function by differentiating between certain revenue-generating activities. This facilitates a more accurate analysis and cross-comparison among divisions. A profit center analysis determines the future allocation of available resources and whether certain activities should be cut entirely.
The managers or executives in charge of profit centers have decision-making authority related to product pricing and operating expenses. They also face considerable pressure as they must ensure that their division's sales from products or services outweigh the costs—that their profit center produces profits year after year, either by increasing revenue, decreasing expenses, or both.
Profit Centers vs. Cost Centers
Not all units within an organization can be tracked as profit centers. This is particularly the case for many departments that provide an essential service within an organization: the research department within a broker-dealer, the auditing/compliance human resources department of a law firm, the inventory control department of a clothing retailer, human resources, and customer service. These divisions have their own costs but do not generate their own revenues. As a result, they are known as cost centers.
While profit centers are operated with a focus on bringing in revenue, cost centers are not associated with the direct generation of profits. Cost centers also include various support departments, such as IT support, human resources, or customer services, which are critical to business functions but do not have a specific responsibility to make money.
Real World Examples of Profit Centers
At the retailer Walmart, different departments selling different products could be divided into profit centers for analysis. For example, clothing could be considered one profit center while home goods could be a second profit center. In addition, departments that rotate on a seasonal basis, such as the garden center or sections relating to holiday decor, can be examined as profit centers to separate these departments' seasonal contribution from those with a year-round contribution.
The computer giant Microsoft has a wide variety of profit centers ranging from hardware to software to digital services. In analyzing these large revenue sources, the company may choose to separate the funds produced from the sale of its Windows operating system from that of other software suites, such as Microsoft Office, or other hardware sectors, such as the Xbox gaming console. This allows the profitability of different products to be examined and correlated based on associated cost and revenue comparisons.
The concept of a profit center is a framework to facilitate optimal resource allocation and profitability. To optimize profits, management may decide to allocate more resources to highly profitable areas while reducing allocations to less profitable or loss-inducing units.
Abstract
A model of the determinants of profit center manager (PCM) compensation is presented and tested. Market, political and human capital factors are included in the model development and testing. Based on a sample from several industries, this study found a complex set of variables affecting PCM compensation.
Journal Information
Strategic Management Journal publishes original refereed material concerned with all aspects of strategic management. It is devoted to the improvement and further development of the theory and practice of strategic management and it is designed to appeal to both practising managers and academics. Strategic Management Journal also publishes communications in the form of research notes or comments from readers on published papers or current issues. Editorial comments and invited papers on practices and developments in strategic management appear from time to time as warranted by new developments. Overall, SMJ provides a communication forum for advancing strategic management theory and practice. Such major topics as strategic resource allocation; organization structure; leadership; entrepreneurship and organizational purpose; methods and techniques for evaluating and understanding competitive, technological, social, and political environments; planning processes; and strategic decision processes are included in the journal. Strategic Management Journal is currently published 13 times a year.
Publisher Information
Wiley is a global provider of content and content-enabled workflow solutions in areas of scientific, technical, medical, and scholarly research; professional development; and education. Our core businesses produce scientific, technical, medical, and scholarly journals, reference works, books, database services, and advertising; professional books, subscription products, certification and training services and online applications; and education content and services including integrated online teaching and learning resources for undergraduate and graduate students and lifelong learners. Founded in 1807, John Wiley & Sons, Inc. has been a valued source of information and understanding for more than 200 years, helping people around the world meet their needs and fulfill their aspirations. Wiley has published the works of more than 450 Nobel laureates in all categories: Literature, Economics, Physiology or Medicine, Physics, Chemistry, and Peace. Wiley has partnerships with many of the world’s leading societies and publishes over 1,500 peer-reviewed journals and 1,500+ new books annually in print and online, as well as databases, major reference works and laboratory protocols in STMS subjects. With a growing open access offering, Wiley is committed to the widest possible dissemination of and access to the content we publish and supports all sustainable models of access. Our online platform, Wiley Online Library (wileyonlinelibrary.com) is one of the world’s most extensive multidisciplinary collections of online resources, covering life, health, social and physical sciences, and humanities.
Rights & Usage
This item is part of a JSTOR Collection.
For terms and use, please refer to our Terms and Conditions
Strategic Management Journal © 1992 Wiley
Request Permissions
What is the best measure of manager performance for a profit center?
Profit per unit: because a profit centre manager is responsible for costs and revenues, profit per unit produced or supplied is an obvious measure. A simple way to calculate this is to divide the profit for a period by the units produced in the period.Which of the following is a measure of performance for the manager of an investment center?
REQUIRED: The method of calculating return on investment (ROI). DISCUSSION: ROI is calculated by dividing a business unit's operating income by average total assets. It is a key performance measure of an investment center.How is performance evaluated for a profit center?
Profit Center Performance Reports Because a profit center is evaluated based on revenue and expenses, the performance report will be based on a segment income statement.What is a profit center manager?
A profit center manager is held accountable for both revenue and costs (expenses), and therefore for profits. This means that the manager is accountable for driving the sales revenue generating activities which lead to cash inflows and the same time controlling the cost-generating activities. Tải thêm tài liệu liên quan đến nội dung bài viết Which of the following is a measure of a managers performance working in a profit center