Which of the following performance measures is more likely to promote goal congruence?
A)inventory turnover
B)marginal income
C)residual income
D)return on investment
E)contribution margin

Question

Quizplus · Accepted Answer

Residual income is more likely to promote goal congruence because it measures the amount of income a unit contributes above a required minimum rate of return on invested capital. This promotes decision-making that involves maximizing income for the company as a whole, rather than just maximizing turnover or income in isolation.

Which of the Following Performance Measures Is More Likely to Promote