Question

Which of the following departments is most likely to be a cost center?

A) sales department of a company selling industrial tools
B) call center of a company that serves customers and cross-sells other products
C) maintenance department of a luxury resort
D) research department of a company providing consultancy services

Answer 1

The maintenance department of a luxury resort is most likely to be a cost center, as it incurs costs without directly generating revenue(option c).

Step-by-step explanation:

The department most likely to be a cost center is the option c: maintenance department of a luxury resort.

This is because a cost center is a part of an organization that does not directly add to profit but still incurs cost to operate. The maintenance department is typically considered a support unit that ensures the smooth operation of the resort by maintaining facilities and therefore does not generate revenue directly. In comparison, the sales department and call center are involved in revenue generation and the research department in consultancy services might be considered a profit center if it directly contributes to the firm's revenue with its services.