ExpertMedium2 marksMultiple Choice
ACCA · Question 04 · A. The nature, source and purpose of management information
The manager of a large commercial hydroponic farm has the authority to negotiate selling prices with supermarkets, control the labor and fertilizer costs, and make decisions regarding the purchase of new automated harvesting equipment.
Which type of responsibility center does this manager control?
The manager of a large commercial hydroponic farm has the authority to negotiate selling prices with supermarkets, control the labor and fertilizer costs, and make decisions regarding the purchase of new automated harvesting equipment.
Which type of responsibility center does this manager control?
Answer options:
A.
Cost center
B.
Revenue center
C.
Profit center
D.
Investment center
How to approach this question
Identify the scope of authority: selling prices (revenue), labor/fertilizer (costs), and new equipment (investment).
Full Answer
D.Investment center✓ Correct
Because the manager controls revenues (negotiating prices), costs (labor/fertilizer), and capital investments (purchasing new equipment), the farm operates as an investment center.
Common mistakes
Selecting Profit Center by missing the detail about purchasing new automated harvesting equipment.
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