Answer (D) is correct . A cost center is a responsibility center that is responsible for costs only. Of the alternatives given, variance analysis is the only one that can be used in a cost center. Variance analysis involves comparing actual costs with predicted or standard costs.
Answer (A) is incorrect because Return on assets cannot be computed for a cost center. The manager is not responsible for revenue (return) or the assets available.
Answer (B) is incorrect because Return on investment cannot be computed for a cost center. The manager is not responsible for revenue (return) or the assets available.
Answer (C) is incorrect because The payback method is a means of evaluating alternative investment proposals.
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