Final answer:
Silas, responsible for both maximizing profits and managing the reinvestment of earnings, is most likely heading an investment center. The correct answer is option B.
Step-by-step explanation:
Silas has recently been promoted to head his department with the responsibility of maximizing profits and ensuring the earnings are reinvested into the business. This description aligns with the duties of managing an investment center. An investment center is a segment, such as a division or department of a company, that is responsible not only for generating revenue and controlling costs but also for managing the center's invested capital. The goal of an investment center is to earn a return on invested capital, and managers of investment centers are evaluated based on the profitability and efficiency with which they use the resources at their disposal.
From the provided scenario where the center earns revenues of $20,000 and variable costs are $15,000, we can deduce that this center generates a profit, as its revenues exceed its costs. However, whether it should continue in business also depends on the comparison of its earnings with the invested capital and expected return on investment. If the center's earnings represent a sufficient return on the invested capital, and there's an efficient use of resources, it would be justified for the center to continue operating.
Given the responsibilities described, Silas is most likely to head an investment center, as he is not only focused on earning profits but also on the effective use of capital. This distinguishes an investment center from a profit center, which is only responsible for generating profits and has less emphasis on investment decisions, or a cost center, which is evaluated on the ability to control costs without direct responsibility for generating revenue.
Therefore, the correct answer to the question is: B) investment center.