What decisions are typically made by a profit centre?

A profit centre is a segment of a business that is responsible for generating revenue and is also accountable for costs, allowing it to measure profitability. Decisions made by a profit centre focus on maximizing profits through various means.

Expanding product lines is an essential decision for a profit centre, as it directly impacts revenue growth. By identifying new products or enhancements that can attract customers, the profit centre can increase sales and improve its overall financial performance.

Determining sales prices is another crucial decision. The pricing strategy directly influences profit margins and sales volume. By setting competitive prices while maintaining profitability, a profit centre can impact its financial success.

Reducing raw material costs is also part of a profit centre's decision-making. By managing costs effectively, the profit centre can improve its profitability without necessarily increasing sales. This aspect of cost control is vital for achieving overall financial goals.

Since all these decisions—expanding product lines, determining sales price, and reducing raw material costs—are integral to the financial success and operational management of a profit centre, the correct choice comprehensively encompasses the key responsibilities of such a business unit.