Final answer:
The three primary types of responsibility centers are Cost centers, Profit centers, and Investment centers. The option that is not one of the primary types is Revenue center. Cost centers manage expenses, profit centers handle both costs and revenues, and investment centers deal with costs, revenues, and investment returns.
Step-by-step explanation:
The three primary types of responsibility centers used in managerial accounting and business are 1) Cost centers, 2) Profit centers, and 3) Investment centers. The option that is not one of the three primary types is 4) Revenue center. Let's define each term:
- Cost Center: A part of an organization that does not directly generate revenue but incurs costs. Typically, the performance is measured by how well costs are controlled.
- Profit Center: A segment of a company that is responsible for both revenue generation and costs, hence the performance is measured by the profit it makes.
- Investment Center: A unit or division within a company for which the manager is responsible for revenue, costs, and the assets invested in the center. Performance is evaluated on the return on investment (ROI) or other financial metrics related to capital usage.
A Revenue center is concerned with the generation of revenue and is responsible for sales activities, but it is not one of the primary centers as it does not account for costs or the use of capital.