One Advantage of Using After-Tax Income as a Performance Measure

question 68

True/False

One advantage of using after-tax income as a performance measure of divisional results is it's a financial accounting measure that is also used to compute the organizational income.This makes it easier to understand and compare.

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Definitions:

Bonuses

Additional financial compensation awarded to employees as a reward for their performance.

Principle of Exceptions

A management principle focusing attention and resources on areas that deviate significantly from standards or expectations.

Standard Costs

Predetermined costs for materials, labor, and overhead used as a benchmark for evaluating actual production costs.

Factory Overhead Cost Variance

The difference between the actual factory overhead costs incurred and the expected (or budgeted) overhead costs based on standard cost accounting.