You are here


6 May, 2015 - 17:10

Managers of profit centers are responsible for expenses and revenues. The income statement is usually the report used to evaluate performance. Income statements for profit centers can emphasize either gross profit or operating income, in addition to showing revenues and expenses of that department. Difficulties arise when expenses are apportioned among departments. Some expenses (period costs and indirect costs) reported on departmental income statements are assigned based on subjective criteria, and the method of allocation is often questionable. Direct costs are under the direct control of the department. Indirect costs are company wide and are referred to as overhead.