Cost centers are evaluated primarily on the basis of their ability to control costs and:
A)Their return on assets.
B)Residual income.
C)The quantity and quality of the services they provide.
D)Their contribution margin ratio.

Question

Quizplus · Accepted Answer

Cost centers are evaluated primarily on their ability to control costs while still providing high-quality services. The focus is not on generating income or maximizing profits, but rather on efficiently managing resources to provide value to the organization. Therefore, option C - the quantity and quality of the services they provide, is the best choice. A, B, and D are incorrect as they focus on financial performance measures that are not applicable to cost centers.

Cost Centers Are Evaluated Primarily on the Basis of Their