Question 1
An investment center manager should be evaluated by
◦ a review of both revenues and expenses, with a focus on operating income.
◦ a flexible budget income statement.
◦ how well assets have been used to generate income.
◦ an examination of actual costs against budgeted costs.
Question 2
The formula for calculating ROI is
◦ net income divided by average operating assets.
◦ segment margin divided by assets minus liabilities.
◦ segment margin divided by average operating assets.
◦ operating income divided by average operating assets.