In order to promote goal congruence, a manager of an investment centre is best evaluated using
A)standard variable costing income statements.
B)budgets and standard costs.
C)return on investment.
D)economic value added.

Question

Quizplus · Accepted Answer

Economic value added (EVA) is a performance measure that evaluates how effectively a manager uses the resources entrusted to them to generate a return above the cost of capital. EVA provides a complete picture of how well goals are aligned between the investment centre manager and the organization as a whole. By using EVA, a manager's performance can be evaluated based on how they increase the value of the company by generating a positive return on invested capital. This promotes goal congruence as the manager is incentivized to act in the best interest of the organization, creating alignment between their goals and those of the company.

In Order to Promote Goal Congruence, a Manager of an Investment