IMANET Exam CMA Topic 2 Question 36 Discussion

A cost center is responsible for costs only. A profit center is responsible for costs and revenues. Hence, the transfer from the cost center must, by definition, be at a cost-based figure The transfer should be at standard variable cost so as to isolate any variance resulting from Core's operations. Assuming fixed costs are not controllable in the short run, the relevant variance is the difference between actual cost and the standard vanable cost.