A divisional manager is evaluated based on the operating income of his division.On the basis of which of the following budget approaches is the divisional manager being remunerated?
A) Cash flow budget approach
B) Capital budget approach
C) Revenue budget approach
D) Expense budget approach
E) Profit budget approach

Question

Quizplus · Accepted Answer

With a profit budget, managers are evaluated on the difference between revenues generated by the sale of goods and services and budgeted cost of making those goods and services, which is the operating income.

A Divisional Manager Is Evaluated Based on the Operating Income