Name the technique of managerial control which may have 'Cost Centre' and 'Revenue Centre'.

Responsibility Accounting

The correct answer is option (1)- Responsibility Accounting.

The technique of managerial control that may have both 'Cost Centre' and 'Revenue Centre' is Responsibility Accounting.

Responsibility accounting is a system of accounting in which different sections, divisions and departments of an organisation are set up as ‘Responsibility Centres’. The head of the centre is responsible for achieving the target set for his centre. Responsibility centres may be of the following types:

1. Cost Centre: A cost or expense centre is a segment of an organisation in which managers are held responsible for the cost incurred in the centre but not for the revenues. For example, in a manufacturing organisation, production department is classified as cost centre.

2. Revenue Centre: A revenue centre is a segment of an organisation which is primarily responsible for generating revenue. For example, marketing department of an organisation may be classified as a revenue center.

3. Profit Centre: A profit centre is a segment of an organisation whose manager is responsible for both revenues and costs. For example, repair and maintenance department of an organisation may be treated as a profit center if it is allowed to bill other production departments for the services provided to them.

4. Investment Centre: An investment centre is responsible not only for profits but also for investments made in the centre in the form of assets.

OTHER OPTIONS

• Budgetary control is a technique of managerial control in which all operations are planned in advance in the form of budgets and actual results are compared with budgetary standards. This comparison reveals the necessary actions to be taken so that organisational objectives are accomplished.

• Ratio analysis is a technique used in financial analysis to evaluate the financial performance and position of a company. By using key financial ratios derived from a company's financial statements (such as the balance sheet and income statement), ratio analysis helps assess the company's profitability, liquidity, solvency, and operational efficiency. These ratios provide insights for investors, creditors, and management to make informed decisions about the company's financial health.

• Return on Investment (ROI): ROI is a financial metric used to evaluate the profitability and effectiveness of investments. It measures the return or gain generated from an investment relative to its cost. ROI is a tool for assessing the financial performance of specific projects, investments, or assets and is not directly related to the management of cost centers and revenue centers.