Which of the following performance measures would be appropriate for evaluating an investment center, which has responsibility for its revenues, costs, and investment base, but would not be appropriate for evaluating cost, revenue, or profit centers?
A) A flexible budget.
B) Variance analysis.
C) A contribution margin income statement by segment.
D) Residual income.

Question

Quizplus · Accepted Answer

Residual income is appropriate for evaluating an investment center because it considers the investment base, unlike cost, revenue, or profit centers which do not have responsibility for investments.

Which of the Following Performance Measures Would Be Appropriate for Evaluating