The measurement most often used to evaluate a business unit organized as an investment center consists of:
A) Contribution margin stated as a percentage of average total assets.
B) Responsibility margin stated as a percentage of net sales.
C) Contribution margin stated as a percentage of net sales.
D) Responsibility margin stated as a percentage of average total assets.

Question

Quizplus · Accepted Answer

An investment center is evaluated based on its ability to generate returns on the assets it controls, so the responsibility margin (operating income) as a percentage of average total assets is the most relevant measure.

The Measurement Most Often Used to Evaluate a Business Unit