Three primary types of Responsibility Centers

 Cost Center is an organizational subunit in which the manager is responsible for costs
only by tracking expenses in a decentralized organization. The cost center does not
generate revenue directly, but it performs functions that are helpful to business
operations. So it’s valuable; by indirectly improving the ability to earn profit by
improving operational efficiency, product value, customer service, etc. For example, the
customer service department. By having excellent customer service, it builds value,
which will then create a loyal customer base.  Also, the Human resources department, in
which it contributes to the company by supporting it retain talents and manage the
benefits for the employees.

 Profit Center is a subunit of the organization in which the manager is responsible for
revenue & costs. It generates revenue and profits directly. Profit center assist the
company by making money, budgeting & providing information for financial decisions.
For example, Seven Eleven, the branches of seven eleven, where it generates revenue
then they incur costs at the same time.

 Investment Center is a subunit of the organization in which the manager is responsible for
revenue, costs & investments. So it has authority to make decisions about investments that are
made in the subunit. For example, SM such as the branches which are SM Manila, SM Megamall,
etc,.

Organization Chart
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