A cost center is a business center that generates only costs and not revenue. An example of a cost center in a multi-hospital corporation is janitorial. It is necessary to provide janitorial services to every department in the hospital, but it generates no revenue. A profit center is a business section that generates both costs and revenues. The emergency room would be a profit center in a multi-hospital corporation. In addition to operating costs, the emergency room generates revenue when patients seek treatment. An investment center is a profit center whose management is responsible for making capital investment decisions that result in direct business profits. The investment center's performance is measured as a return on investment. One example of an investment center is a new parking structure for the hospital. When patients know they will be able to find parking and be seen easily, there will be no reason to go somewhere else when more parking spaces are available.

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The description provided defines three types of business centers cost center profit center and investment center Heres a summary of each 1Cost Center ... View the full answer