A profit center manager's performance is typically measured based on the
A)Direct material and direct labor variances only.
B)Overall profit compared to the flexible budget.
C)ROI.
D)None of these answer choices are correct.

Question

Quizplus · Accepted Answer

Profit center managers are responsible for generating profit for a business unit, and thus their performance is typically evaluated based on the overall profit compared to the flexible budget. This provides a comprehensive measure of how well the manager has managed resources and controlled costs to achieve a profitable outcome. Direct material and direct labor variances are typically used to evaluate the performance of production departments, while ROI is used to evaluate the profitability of investments, and therefore are not the best measures of a profit center manager's performance.

A Profit Center Manager's Performance Is Typically Measured Based on the