In evaluating the profit center manager, the income from operations should be compared
A) across profit centers
B) to historical performance or budget
C) to the competitor's net income
D) to the total company earnings per share

Question

Quizplus · Accepted Answer

Comparing the income from operations of the profit center to historical performance or budget will help evaluate the manager's effectiveness in generating profits within the established framework. Comparing to other profit centers may not be fair as they may have different operating structures, and comparing to the competitor's net income or the total company's earnings per share may not provide a true picture of the profit center's performance.

In Evaluating the Profit Center Manager, the Income from Operations