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Essay / Research Paper Abstract
This 5-page paper examines responsibility centers for accounting purposes and discusses advantages and disadvantages. Bibliography lists 5 sources.
Page Count:
5 pages (~225 words per page)
File: AS43_MTcostcent.rtf
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FINANCIAL CENTERS FOR PROFIT - DECISION-MAKING Research Compiled by 7/2010 Please
Introduction In this paper, the student has been asked to assume she has been appointed to the position of finance director
for a large multinational corporation. The company in question operates internationally and offers a diverse product, service and business portfolio. There are both internal and external customers.
In an attempt to maximize profits for the entire corporation, the new finance director has been asked to make managers either cost center managers, profit center
managers or investment center managers. In the remainder of this paper, well examine the advantages and disadvantages of each type of manager - and the responsibility centers they would oversee.
As an overview, we need to understand that, in any company, an operating unit is either making money, or its taking money away
from a companys profits (Hoffman 1999; 47). This is the difference between a cost center and a profit center (Hoffman 1999; 47). Cost Center Manager
Cost centers are those areas of a company that mainly generate costs for the company, but no revenue. Typical examples of cost centers can include call centers, administrative
support and R&D. In other words, these centers are necessary for the companys survival, but they dont add anything, directly, to a companys bottom line.
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