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In a decentralized organization, upper managers need a way to evaluate the performance of unit ...

In a decentralized organization, upper managers need a way to evaluate the performance of unit managers. Based on factors under the unit manager's control, organizational units are categorized as cost centers, profit centers, or investment centers. Classify each of the following centers by placing an "X" in the appropriate column.

	Cost	Profit	Investment
Residual income is used to evaluate unit managers
Purchasing department
Shoe department in local department store
Independently-operated division with sole decision-making authority for all areas
Manager is expected to generate a profit for unit
ROI is used to evaluate unit manager
Manager cannot set selling price for products
Manager is expected to invest in assets that generate profits
Overall profit compared to flexible budget is used to evaluate unit manager
Free gift-wrapping department in local department store

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Managerial Accounting

Edition: 4^th

Author: Davis

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hcraik2 Author

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Smart ... Thanks!

brina10

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Good timing, thanks!

zsc999

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Correct

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