A manager that is part of an investment center is evaluated based on:

A. Their ability to increase the price of their product as compared to competitors.

B. Their ability to make a profit in relation to the level of resources they have been provided.

C. Their ability to cut costs as compared to the amout of equity the investors have put into the business.

D. Their ability to earn revenue in relation to the level of obligations the company is liable.

Sales margin is an indication of _________.

While _____________ is indicated in the capital turnover ratio.

A. Efficiency. Differentiation.

B. Low Cost Leadership. Substitution.

C. Differentiation. Substitution.

D. Differentiation. Low Cost Leader.

A flexible budget variance:

A. Will always have the same amount for fixed costs as the initial master budget.

B. Changes the level of volume budgeted to match actual levels.

C. Provides wiggle room for management projections.

D. Does not indicate management performance.

Residual income is useful because:

A. It indicates the level of leverage managers have from variable and fixed cost structure.

B. It allows managers to accept projects that may be below their current level of return on investment.

C. Residual income is not a useful evaluation tool. It is only used for academic reasons.

D. It provides the return on investment.