ACCA Performance Management (F5) Certification Practice Exam

What primarily determines a revenue center's success?

1. Cost management

2. Revenue generation performance

3. Market share expansion

4. Product innovation

The correct answer is: Revenue generation performance

A revenue center's success is primarily determined by its revenue generation performance. This is because the fundamental purpose of a revenue center is to focus specifically on generating income without the obligation to manage costs directly. It is evaluated based on its ability to maximize sales and enhance overall revenue, making the performance of revenue generation the key indicator of success. In contrast, while cost management is indeed important for overall profitability in different types of centers, it is not the primary goal of a revenue center. Similarly, market share expansion is a strategic objective that could indirectly relate to revenue but does not directly indicate the success of revenue generation itself. Product innovation plays a crucial role in attracting and retaining customers, thereby influencing revenue levels, but it again is not the core metric of success for a revenue center. The direct link of revenue generation performance to the definition and objectives of a revenue center establishes it as the most fitting determinant of success in this scenario.