From the List Below the Best Financial Performance Measure for a Cost

question 48

Multiple Choice

From the list below the best financial performance measure for a cost centre would be:

• A)return on investment
• B)residual income
• C)budgeted costs less actual costs
• D)economic value added

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Definitions:

Operating Departments

Operating departments are the functional areas within an organization directly involved in producing the company's main goods or services, such as production or sales departments.

Direct Expenses

Direct expenses are costs that can be directly traced to a specific department, project, or activity, such as raw materials and labor used in the production of goods.

Cycle Efficiency

The effectiveness and efficiency of a business process or cycle in achieving its objectives without waste.

Days

A unit of time measurement equal to 24 hours, often used in business to measure durations such as payment terms and production cycles.