What term describes autonomous divisions where both costs and revenues can be calculated separately?

• A. Cost Centers
• B. Profit Centers
• C. Indirect Costs
• D. Direct Costs

Answer: (B)

Profit centers are autonomous divisions where both costs and revenues can be calculated separately, enabling you to assess the unit’s profitability. This setup allows managers to be judged on the profits they generate, not just the costs they control. Cost centers focus only on costs, not revenues; revenue centers focus on revenue without considering costs. Direct and indirect costs describe how costs are traced, not the performance measurement of a business unit. So the term that describes divisions where both sides can be measured separately is profit centers.