Which of the following would be the best measure on which to base a segment manager's performance evaluation for purposes of granting a bonus?
A)Segment sales revenue.
B)Segment contribution margin.
C)Proﬁt margin controllable by the segment manager.
D)Segment proﬁt margin.
E)Segment net income.

Question

Quizplus · Accepted Answer

Profit margin controllable by the segment manager is the best choice for a performance evaluation as it focuses solely on the profitability of the segment that the manager is responsible for and takes into account the manager's ability to control costs and maximize profits. Segment sales revenue and net income can be affected by factors outside of the manager's control, while segment contribution margin and profit margin may not fully capture the manager's performance in terms of cost control.

Which of the Following Would Be the Best Measure on Which