A subtotal used in evaluating the performance of a responsibility center manager, as distinct from the performance of the center, is:
A) Contribution margin, less traceable fixed costs.
B) Sales, less committed costs.
C) Contribution margin, plus fixed costs deferred into inventory.
D) Contribution margin, less controllable fixed costs.

Question

Quizplus · Accepted Answer

A subtotal used in evaluating the performance of a responsibility center manager, as distinct from the performance of the center, is contribution margin, less controllable fixed costs. This is because controllable fixed costs are those costs that can be directly controlled by the manager, and subtracting them from the contribution margin gives a clearer picture of the manager's performance in generating revenue and controlling costs.

A Subtotal Used in Evaluating the Performance of a Responsibility