Responsibility accounting (LO1, LO2, LO3). Chemco International is a large firm that has operations in...
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Responsibility accounting (LO1, LO2, LO3). Chemco International is a large firm that has operations in numerous countries and many product lines. The underlying manufacturing processes in the various factories have many factors in com-mon. Accordingly, Chemco has assembled a team of 25 chemical engineers and process specialists. Any division could call on this team for help with improving their process. The team would then charge the division a predetermined amount. Chemco expects the central research facility to recover its costs but not to make a profit.
Required:
a.Should Chemco evaluate the central research group as a cost center or a profit center? What benefits and costs do you see with this choice?
b. What would be a good way to evaluate the performance of the central research group?
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