Key concepts: Responsibility center, Management controlLet us first of all understand the concept of the responsibility center as in the question four types of responsibility centers is used. Use of responsibility centers is one of the most established and widely used techniques in financial control. Responsibility accounting breaks a large organization into smaller, more easily manageable units known as responsibility centers. Each unit is looked upon as a small business. Managers bear an element of responsibility for the performance of their respective centers.The principle of controllability applies to responsibility accounting. The presumption underlying controllability is that every dollar earned or dollar spent is under the control of, and can be traced to, at least one manager.Responsibility accounting represents decentralization of a business enterprise. It is comparable to a political policy of shifting power from the federal government to state or even municipal government.What cost measurements are used for each of these centers?

Here the organization is divided into four different responsibility centers:
1. Cost centers are those in which the manager and the center employees have control over costs, but not revenues or the level of investment.
2. Revenue center:
The center manager has control over revenues, but not costs or the level of investment, in a revenue center.
3. Profit center:The manager is responsible for both the revenues and costs. Thus he is responsible for the difference between the revenue and costs.

4. Investment centerInvestment center is one in which the manager controls costs, revenue, and the level of investment. Level of investment represents expenditure on space, equipment, and other capital resources.The metrics used to evaluate performance vary for each type of responsibility center. For a cost center, price variance is assessed. Price variance is the difference between the average price paid for a certain supply and the budgeted amount. The assumption is that the purchasing manager, through management of factors such as inventory and purchasing discounts, exerts some control over average price paid.
In a revenue center, sales price and sales volume are examined. In profit center profits are examined.
Investment centers may be assessed through a number of different metrics. One of the best known of these is return on investment.Which centers performed better than budget, and which performed worse than budget?The centers which have positive variance has performed better and vice versa. Thus cost centers and investment centers have performed better. On the other hand revenue center and profit center have performed poorly.What are the main causes for the performance of each center?The main causes have been discussed above that is for a cost center, price variance is assessed. Price variance is the difference between the average price paid for a certain supply and the budgeted amount. The assumption is that the purchasing manager, through management of factors such as inventory and purchasing discounts, exerts some control over average price paid. In investment center the investments have been examined.
In a revenue center, sales price and sales volume are examined. In profit center profits are examined.