Companies are often organized into departments by functions, such as operations, marketing, sales, corporate headquarters, etc. Typically, each one of these departments is then assigned specific responsibilities and referred to as either a cost center, a profit center, or an investment center.
Analyze how cost center accounting practices in German companies differ from the practices in your current or previous organization or one with which you are familiar.
Explain which country’s accounting practices you would prefer to use for your organization and why. Be sure to provide your rationale by using specific examples.
Provide an example of a profit center taken from your professional experience, the resources, or research. Explain why this is a profit center, including the methods of performance evaluation, and explain how it contributes to the success of the organization.
Provide an example of an investment center taken from your professional experience, the resources, or research. Explain why this is an investment center, including the methods of performance evaluation, and explain how it contributes to the success of the organization.
The organization of companies into smaller departments is something that is not actually new especially in a competitive business environment where efficiency and effectiveness must be enhanced at all the time. Such departments are assigned specific roles which holistically contribute to the attainment of organization’s goal and objective. These responsibilities can be I terms of a department that is solely concerned with revenue and cost decision while the other being interested in in Investment decision among others. This paper explores how cost, profit and investment center contributes to the organization holistically.