Basic Accounting Knowledge: Revenue Center

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The purpose of determining revenue centers is to organize marketing activities.

A typical revenue center usually obtains finished products from the production department and is responsible for sales and sales.

distribution

Departments such as

company

The sales branch or sales department.

If the income center has the power to set the price, the manager of the center should be responsible for the gross proceeds. If the income center does not have the power to set the price, the manager of the center must only be responsible for the actual sales volume and the sales structure.

In order to make the revenue center not only pursue sales revenue to the maximum, it is more important to pursue the maximum marginal contribution. Therefore, in assessing the performance of the revenue center, the concept of marginal cost of a product should be included.

With the gradual adoption of Activity-Based Costing in distribution, marketing and sales activities, sales units are able to put their

Sale

The cost and the cost of providing services to each consumer are taken into account, so that the enterprise can use the activity based costing system to turn the revenue center of marketing and sales activities into a profit center, so that the profit contribution of the sales department can be assessed.

As a result, the fact that many scattered business units are only used as income centers is becoming less and less.