Explain how the choice of the responsibility centre type (cost, revenue, profit, or investment) affects budgeting.

A.

The type of responsibility centre affects financial planning models. These models affect the behaviour of managers who aim to achieve a high profit and increase revenues.

B.

The type of responsibility centre determines the strategic plans for the organization. The organization tailors it's long-range and short-range plans based on the goal of each responsibility centre.

C.

The choice of a responsibility centre type guides the variables to be included in the budgeting exercise.

D.

None of the above