THE IMPLEMENTATION OF PROFIT CENTRES INSIDE AN ECONOMIC ENTITY

Adrian Grosanu () and Paula Ramona Rachisan ()
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Paula Ramona Rachisan: Faculty of Business, Babes-Bolyai University, Cluj-Napoca, Romania

JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA, 2008

Abstract: The first part of this paper presents, from a conceptual point of view, the responsibility centres and we used a theoretical and methodological approach that allows us to understand the role generally played by the responsibility centres, profit centres in particular, concerning the optimization of economic efficiency of a business. According to the existing particularities of economic entities of the cosmetic industry, we delimited some responsibility centres and identified some of the relations between them. This way we determined two categories of expenses centres: The centre of general expenses of the entity which include the expenses of the administrative function of the entity (including the financial accounting departments, human resources, quality control, environmental protection, research department and so on); The centre of expenses with the auxiliary activity of the entity (central heating). At the same time, we determined two categories of profit centres: Level I profit centres – for the productive activity of the entity; Level II profit centres – for the sales activity of the products obtained in the level I profit centres. We also underlined the fact that there are some transfers between these responsibility centres which take place trough the prices of inner cession of the transfer prices.

Keywords: economic efficiency; economic entity; efficiency; profit centres; budget (search for similar items in EconPapers)
JEL-codes: L25 M49 (search for similar items in EconPapers)
Date: 2008
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http://tbs.ubbcluj.ro/RePEc/bbn/journl/Negotia_2_2008.pdf Revised version, 2008 (application/pdf)

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Persistent link: https://EconPapers.repec.org/RePEc:bbn:journl:2008_2_9_grosanu

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