The Best Measure of the Performance of the Manager of a Profit

question 11

Multiple Choice

The best measure of the performance of the manager of a profit center is the

• A) rate of return on investment.
• B) success in meeting budgeted goals for controllable costs.
• C) amount of controllable margin generated by the profit center.
• D) amount of contribution margin generated by the profit center.

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Definitions:

Fixed Cost

Regular, unwavering expenses in business operations that do not fluctuate with changes in production level or sales volume.

Cost Formula

An equation used to calculate the total cost of production or service delivery, considering both fixed and variable components.

Variable Selling Expenses

Costs associated with selling a product or service that vary directly with the level of sales or production volume.

Fixed Expenses

Costs that do not fluctuate with changes in production or sales volume, such as rent, salaries, and insurance.