1.
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1. Blakefield, Inc., has grown significantly over the past decade through innovation and
acquisition. Information on several of its divisions follows.
Solution
Responsibility Centres Responsibility centres are sub-divisions or departments within an
organisation with a specific objective or a task. All the decision making and control over the
assets are retained with the specific responsibility centre. The major purpose is to create better
accountability and a competitive spirit within the larger group. Responsibility centres could be of
the following three types; a) Cost centre b) Profit centre c) Investment centre Cost Centre A cost
centre is a unit which does not have control over the sales or revenue generation. They act as a
facilitators for the other units of the organisation. Profit centres These can be considered as a
business group within the larger organisation. They retain all the decision making and control
over the assets. They are responsible for both the costs and revenues and thereby profit
generation also. Investment centres Investment centres tend to manage the revenues, costs and
also the assets under their control. However the focus is on optimum utilisation of assets rather
than income generation. Answer to 1 a) From the above brief justification, the following
classification is made: Olliepods - Profit centre This is because, all the short run decisions
regarding manufacturing (cost) and sales (revenue) are with the President of the division.
Polyspreen - Cost centre Polyspreen manufactures its products only for captive consumption by
Olliepods division. Thus the same doesn