Responsibility centres - part 2

In this lesson

1. 0:00 Investment centres and their responsibilities
2. 0:46 Why investment centres control costs and revenues
3. 1:34 Assets as a key investment centre responsibility
4. 1:59 Revenue centre metrics and performance measures
5. 2:49 Why revenue centres exclude cost accountability
6. 3:47 Sales price variance and sales growth metrics

About this lesson

This is a crucial distinction for Performance Management and Strategic Business Leader papers, where you need to understand which managers are accountable for what. The video works through two practical examples. First, you'll see how investment centre managers are responsible for costs, revenues, and assets—but not strategy or centralised functions like HR. The key difference from profit centres is that investment centre managers can make decisions about new investments and asset allocation. Second, you'll explore how revenue centre managers are appraised solely on their ability to generate sales, using metrics like sales price variance and sales growth—never on costs or strategic decisions, since those fall outside their control. By the end, you'll be confident identifying which responsibility centre applies to different business scenarios and which performance measures matter for each one. This understanding will help you tackle objective test questions and case study scenarios that test your grasp of management accounting structures.

Duration: 4m