In evaluating the performance of a profit center manager,the manager
A)and the sub-unit should be evaluated on the basis of the same costs and revenues.
B)should only be evaluated on the basis of variable costs and revenues of the sub-unit.
C)should be evaluated on all costs and revenues that are controllable by the manager
D)should be evaluated on all costs and revenues that can be directly traced to the sub-unit.

Question

Quizplus · Accepted Answer

Evaluating the performance of a profit center manager requires considering all costs and revenues that are controllable by the manager. This includes both fixed and variable costs and revenues that can be attributed to the sub-unit. Focusing only on variable costs and revenues (B) would not provide a complete picture of the manager's performance, while evaluating the manager and sub-unit based on different costs and revenues (A) would be unfair and inaccurate. Similarly, limiting the evaluation to costs and revenues that can be directly traced to the sub-unit (D) may not capture all aspects of the manager's control over resources. Therefore, the best choice is C.

In Evaluating the Performance of a Profit Center Manager,the Manager