The income calculation for a divisional manager's return on investment should be based on:
A) divisional contribution margin.
B) profit margin controllable by the divisional manager.
C) profit margin traceable to the division.
D) division income before interest and income tax.

Question

Quizplus · Accepted Answer

The income calculation for a divisional manager's return on investment should be based on the profit margin controllable by the divisional manager. This approach ensures that the manager is evaluated based on the financial outcomes they can directly influence, making the assessment of their performance more accurate and fair.

The Income Calculation for a Divisional Manager's Return on Investment