Most Organizations Use Residual Income Instead of Return on Investment

question 122

True/False

Most organizations use residual income instead of return on investment (ROI) as a performance measure.

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Definitions:

Equivalent Units

Equivalent units is a concept in cost accounting used to allocate costs to partially completed goods, converting them into the amount of finished goods units.

Weighted-average

A calculation that takes into account the varying degrees of importance or quantities of different items in a data set, providing a figure that reflects their proportional contributions.

Materials

Substances or components used in the production or manufacturing of goods.

Equivalent Unit

A measure used in cost accounting to express the amount of work done on incomplete units in terms of fully completed units.