Central management of Holdum, Inc., evaluated divisional performance using residual income measures. The division managers were ranked

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Central management of Holdum, Inc., evaluated divisional performance using residual income measures. The division managers were ranked according to the residual income in each division. A bonus was paid to all division managers with residual income in the upper half of the ranking. The bonus amount was in proportion to the residual income amount. No bonus was paid to managers in the lower half of the ranking. What biases might arise in this system?

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Cost Accounting

ISBN: 9780256069198

3rd Edition

Authors: Edward B. Deakin, Michael Maher

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