Detailed Answer
(a) A responsibility center is any point within an organization
where control exists over cost incurrence, revenue
generation, and/or the use of investment funds. A responsibility
center can be an operation, a department, a division, or even an
individual. The key point to note for this question is that no
matter what product costing method is used, the responsibility
center is always used for control purposes. In job order costing,
costs are accumulated by responsibility center and then assigned
to specific jobs or orders through the use of a job cost sheet.
Even though the job cost sheet will usually reflect the efforts of a
number of responsibility centers, it will not be used for control
purposes. Any needed cost control will be handled on the responsibility
center level. In process costing, costs are accumulated
by the responsibility center and recorded on a production
cost report that will be used to develop a product’s cost. Since
the production cost report shows the efforts of only one responsibility
center, it is used for both product costing and control
purposes. Thus, for control purposes, costs are accumulated by
responsibility center for both job-order and process costing.
