In designing an effective management control system for a mu

In designing an effective management control system for a multinational corporation, the accountant should measure factors appropriate for each unit\'s level of responsibility. Which of the following measures would be appropriate for evaluating the performance of an investment center?

a) Output on costs of input

b) Residual income

c) EBIT

d) All of the above

Solution

Residual income would be appropriate for evaluating the performance of an investment center Residual income measures the excess of operating income over minimum required return Option B is correct