The performance evaluation of cost centers is typically based on which of the following?
A)Sales volume variance
B)Flexible budget variance
C)Return on investment (ROI)
D)Return on assets (ROA)

Question

Quizplus · Accepted Answer

The performance evaluation of cost centers is typically based on the flexible budget variance, which compares actual costs to the budgeted costs for the level of activity achieved during the period. Variance analysis helps managers identify the reasons for differences between actual and budgeted costs, and take corrective action. Sales volume variance, ROI, and ROA are more commonly used to evaluate the performance of profit centers or investment centers rather than cost centers.

The Performance Evaluation of Cost Centers Is Typically Based on Which