Many Companies View Performance Margin as a More Useful Tool

question 88

Multiple Choice

Many companies view performance margin as a more useful tool than responsibility margin for evaluating segment managers.This is because:

• A)Managers have no control over traceable fixed costs.
• B)Performance margin is not affected by the size of the department.
• C)Performance margin indicates the change in operating income that would result from closing the department.
• D)Performance margin includes only those revenue and costs under the manager's direct control.

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Definitions:

Annuity

A financial product that pays out a fixed stream of payments to an individual, typically used as part of a retirement strategy.

Income Taxes

Taxes levied by governments on individuals or corporations' income or profits.

Capital Budgeting

The process that a business undertakes to evaluate potential major projects or investments, involving the calculation of future cash flows and the application of discounting techniques.

Accumulated Depreciation

Accumulated depreciation represents the total amount of depreciation expense that has been recorded for an asset since it was acquired, reflecting its decrease in value over time.