Managers of cost centers are evaluated according to the profits which their departments are able to generate
Falquez Company sells three products: R, S, and T. Data for activity of Falquez Company during July are as follows:$\begin{array}{lllll}
&&&\text { Products }\
&\text { Total } &R &S&T\
\text { Sales } & £ 800,000 & £ 150,000 & ? & £ 200,000 \
\text { Contribution margin ratio } & 32 \% & ? & 25 \% & 40 \% \
\text { Traceable fixed expenses } & £ 120,000 & £ 25,000 & £ 60,000 & ?
\end{array}$

Common fixed expenses for July amounted to £90,000.

Question

Managers of cost centers are evaluated according to the profits which their departments are able to generate
Falquez Company sells three products: R, S, and T. Data for activity of Falquez Company during July are as follows:$\begin{array}{lllll}
&&&\text { Products }\
&\text { Total } &R &S&T\
\text { Sales } & £ 800,000 & £ 150,000 & ? & £ 200,000 \
\text { Contribution margin ratio } & 32 \% & ? & 25 \% & 40 \% \
\text { Traceable fixed expenses } & £ 120,000 & £ 25,000 & £ 60,000 & ?
\end{array}$
 
Common fixed expenses for July amounted to £90,000.

Quizplus · Accepted Answer

Managers of cost centers are evaluated based on their ability to control costs, not on the profits their departments generate, as cost centers do not directly generate revenue.

Managers of Cost Centers Are Evaluated According to the Profits