How is performance evaluated for a cost center?
A) Actual costs incurred compared to budgeted costs.
B) Actual segment margin compared to budgeted segment margin.
C) Comparison of actual and budgeted return on investment (ROI) based on segment margin and assets controlled by the segment.
D)None of the above.

Question

Quizplus · Accepted Answer

Performance for a cost center is evaluated by comparing actual costs incurred to the budgeted costs. This helps to identify whether the cost center is operating efficiently and whether there are any areas where costs need to be reduced. Option B and C are not relevant for a cost center evaluation as they are used for profit centers. Option D is not a correct statement.

How Is Performance Evaluated for a Cost Center