Question

A unit of an organization is referred to as an investment center if it has:

a. Authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply
b. Responsibility for developing markets for and selling the output of the organization
c. Authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply and significant control over the amount of invested capital
d. Authority to make decisions over the most significant costs of operations, including the power to choose the sources of supply
e. Authority to provide specialized support to other units within the organization

Answer 1

c. Authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply and significant control over the amount of invested capital.

Step-by-step explanation:

A unit of an organization is referred to as an investment center if it has authority to make decisions affecting the major determinants of profit, including the power to choose its markets and sources of supply and significant control over the amount of invested capital.

An investment center can be defined as a business unit (department) within a business firm, that is saddled with the responsibility of generating its own revenue, expenses (costs), and assets and is able to contribute directly to the firm's profitability based on all three factors.

Generally, an investment center has its own statement of cash-flow which typically comprises of a balance sheet and an income statement. An example of an investment center is the financing department of an airplane manufacturing company or a subsidiary company.