What Method Is Particularly Appropriate for Measuring and Rewarding the Performance

question 61

Multiple Choice

What method is particularly appropriate for measuring and rewarding the performance of top SBU managers and group-level executives when performance factors and their importance vary from one SBU to another?

• A) return on investment
• B) year-end bonuses
• C) zero base budgeting
• D) weighted-factor method
• E) return on assets

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Definitions:

Economic Rent

Income derived from the possession of a unique resource, exceeding that which is needed to keep the resource in its current employment.

Economic Profit

The profit from producing goods and services while considering both explicit and implicit costs, including opportunity costs.

Producer Surplus

The gap between the price that sellers are prepared to accept for a product and the real price it sells for in the market.

Total Variable Costs

The total of all costs that vary with the level of production or output.