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The Implementation Of Profit Centres Inside An Economic Entity

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Author Info

  • ADRIAN GROSANU

    ()
    (Faculty of Economics and Business Administration, Babes-Bolyai University, Cluj-Napoca, Romania)

  • PAULA RAMONA RACHISAN

    ()
    (Faculty of Business, Babes-Bolyai University, Cluj-Napoca, Romania)

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.

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File URL: http://tbs.ubbcluj.ro/RePEc/bbn/journl/Negotia_2_2008.pdf
File Function: Revised version, 2008
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Bibliographic Info

Article provided by Babes-Bolyai University, Faculty of Business in its journal JOURNAL STUDIA UNIVERSITATIS BABES-BOLYAI NEGOTIA.

Volume (Year): (2008)
Issue (Month): ()
Pages:

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Handle: RePEc:bbn:journl:2008_2_9_grosanu

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Related research

Keywords: economic efficiency; economic entity; efficiency; profit centres; budget;

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References

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  1. Bollerslev, Tim, 1986. "Generalized autoregressive conditional heteroskedasticity," Journal of Econometrics, Elsevier, vol. 31(3), pages 307-327, April.
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  5. Mervyn King & Enrique Sentana & Sushil Wadhwani, 1990. "Volatiltiy and Links Between National Stock Markets," NBER Working Papers 3357, National Bureau of Economic Research, Inc.
  6. Myers, Stewart C, 1984. " The Capital Structure Puzzle," Journal of Finance, American Finance Association, vol. 39(3), pages 575-92, July.
  7. Myers, Stewart C., 1984. "Capital structure puzzle," Working papers 1548-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
  8. Charles C. Holt, 1962. "The Influence Of Growth Duration On Share Prices," Journal of Finance, American Finance Association, vol. 17(3), pages 465-475, 09.
  9. Stewart C. Myers, 1984. "Capital Structure Puzzle," NBER Working Papers 1393, National Bureau of Economic Research, Inc.
  10. William F. Sharpe, 1964. "Capital Asset Prices: A Theory Of Market Equilibrium Under Conditions Of Risk," Journal of Finance, American Finance Association, vol. 19(3), pages 425-442, 09.
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