The best measure for evaluating the effectiveness of a manger in an investment center would be ________.
A) residual income measures
B) success in controlling costs
C) success in meeting budgeted revenues
D) current ratio measures

Question

Quizplus · Accepted Answer

Residual income measures are the most appropriate way to evaluate the effectiveness of a manager in an investment center, as it takes into account both the generated income and the cost of the investment center. This measure helps to determine if the investments made by the center are profitable and if the manager is making effective use of the available resources. Success in controlling costs and meeting budgeted revenues are important factors, but they do not provide a complete picture of the center's performance. Current ratio measures are more suitable for evaluating the financial health of the entire organization, rather than the performance of a specific investment center.

The Best Measure for Evaluating the Effectiveness of a Manger