When Assessing Performance,one Way to Compensate for Differences Among Divisions

question 62

Multiple Choice

When assessing performance,one way to compensate for differences among divisions of a multinational organization would be for the parent company to

• A)use different target rates of return to compute residual incomes.
• B)modify the return on investment calculation so that foreign currency fluctuations are removed from all financial statement figures.
• C)classify all domestic divisions as investment centers and all foreign divisions as profit centers.
• D)use financial performance measures for units whose records are kept in the domestic currency and non-financial measures for units whose records are kept in a foreign currency.

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Definitions:

Power

The ability or capacity to do something or act in a particular way; often refers to the amount of control one has over circumstances or other entities.

Planes

A flat or relatively smooth surface; points of reference by which positions or parts of the body are indicated.

Points Of Reference

Specific locations or landmarks used to establish positions or to measure distances.

Lesion

An injury or wound; a circumscribed area of pathologically altered tissue.