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Chapter 5

Cost Revenue Profit Investment
centre centre centre centre
Control over It can control It may have It is It is
costs the incurrence little or no responsible for responsible for
of costs control over planning and planning and
costs controlling the controlling the
costs by costs and has
purchasing at some
the most responsibility
economical for investing in
price non-current
assets and
other projects

Control over It has no It is It is It is
revenues control over responsible for responsible for responsible for
revenues the generation the generation the generation
of revenue. of revenue by of revenue
This may not setting the
necessarily selling prices
involve much
(or any) control
over unit
selling prices
Control over It has no It has no It has no It is
investment control over control over control over responsible for
funds the investment the investment the investment investing in
of funds of funds of funds assets that will
yield an
appropriate
rate of return
Goal Containment of Generation of Maximisation Maximisation
costs revenues of net income of rate of return
on assets

Basis of How well costs How much Amount of Rate of return
evaluation are controlled revenue is profit on assets and
generated generated other
performance
measures
Example

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