Using ROI as a performance measure is most appropriate for the manager of a
A)profit center
B)cost center
C)investment center
D)merchandise control center

Question

Quizplus · Accepted Answer

ROI (return on investment) is a measure of profitability that evaluates the efficiency of an investment or portfolio by comparing the net profit to the amount invested. This measure is most appropriate for the manager of an investment center, where decisions are made about investing capital in assets that generate income. Managers of profit centers are more concerned with revenue and profit, while managers of cost centers focus on cost containment. Merchandise control centers may be responsible for inventory management and sales, but ROI is not the most relevant performance measure for these types of centers.

Using ROI as a Performance Measure Is Most Appropriate for the Manager