Which of the following would most likely be evaluated using residual income?
A) cost center
B) profit center
C) revenue center
D) investment center

Question

Quizplus · Accepted Answer

Residual income is most commonly used to evaluate investment centers, which are responsible for investing capital in projects or assets that generate income. Residual income measures the income generated by the investment center above the minimum required return on the capital invested. Cost centers are responsible for controlling costs, revenue centers generate revenue, and profit centers generate both revenue and control costs, but they do not involve investing capital.

Which of the Following Would Most Likely Be Evaluated Using