Responsibility Centre: A responsibility center is a segment of an organization for which a particular executive is responsible. There are three types of responsibility centers— expense (or cost) centers, profit centers, and investment centers.

Responsibility centre is of various types which are stated below:

1. Cost Centre: A large business is divided into a number of functional departments (such as production, marketing and finance) for administrative convenience. These departments are further divided into smaller divisions for cost ascertainment and control. These smaller divisions are called cost centers. A cost centre is a location, person or item of equipment (or group of these) in relation to which cost can be ascertained and controlled. In simple words, it is a subdivision of the organization to which cost can be charged.

2. Revenue Centre: A revenue centre is a unit of the organisation which is mainly responsible for generating sales revenue. Manager of revenue centre do have control over cost, investment of funds but usually has control marketing expenses. Actual revenue is compared with budgeted revenue and actual marketing expenses with budgeted marketing expenses to evaluate the performance of revenue centre.

3. Profit Centre: A profit centre is a unit of the organisation whose manager is responsible for both generating revenues and costs. The primary responsibility of manager of a profit centre is to make decisions that affect both costs and revenues (and thus profits) for the department or division. Maximisation of profit is the primary aim of a profit centre.