Ron is back in your office this week for a regular update on the projects you have been working on. His comment this week is "You know, I've been going through cost center classifications all week with our accounting team in terms of profit, cost, and investment centers. Do you know what they had the audacity to classify HR as?"

Can you tell Ron the appropriate answer and explain how you would measure the performance of the type of center in which HR has been placed? (8 marks)

Carol's Tips and Tricks

Poor Ron is not happy with how he has been classified! Assume that the Management Accountant has made the correct classification for Ron's department. Your job is to make Ron see that the classification is, in fact, correct.

Some hints to walk you through it:

1. Briefly explain the three classification center choices. (3 marks)
2. Tell Ron which one HR would fit into and why (2 marks)
3. Explain to Ron some productive options that could be used to evaluate his center (hint: one option to consider is the balanced scorecard) (3 marks)