The Demise of Cost and Profit Centre – Article Example
The paper "The Demise of Cost and Profit Centre " is a delightful example of an article on finance and accounting. The demise of Cost and Profit seeks to; show how to decentralize an organizations unit in relations to its management. The base of this concept is derived from the metric turnover and management control center and profit center is one of the identified categories under management control center (Kaplan 2007). Profit center managers have the powers to supervise production and sales department, the main reason why this two department are integrated together is; they determine the financial health of a company. The outcome given by a company should be horizontal the same with the cost of production to avoid running into the loss. By the virtue that, personnel’s running this department has limited powers makes growth limited, limitation comes from lack of authority to independently work and plan in terms of investment (Kaplan 2007). According to Kaplan, (2007) Cost center should be a strategic management factor that controls how finances are being undertaken in each and every organization. Every company has the ability to control and determine the prices of its product in the market; however, the actual determinations of the price are done by retailers themselves. Options are given out, on ways in which a manufacturer can instigate dynamics that aims in charging the pricing of its product in the market. Cost and profit centers should work independently, without having a person who is controlling the flow and structure of work. It should be left out, for the expertise and employees in that sector, to come up with a comprehensive strategic plan on how to work. A person is more likely to be productive when is left to work alone, compared when is in constants supervision.