Which of the following statements concerning performance evaluation tools used in decentralized operations is correct? A. Performance reports can only be used to evaluate the performance of cost centers. B. A negative residual income indicates that a segment's return on investment is greater than the company's target rate of return. C. Segment margin is calculated by subtracting a segment's total traceable costs from its sales revenue. D. A segment's return on investment can be calculated by dividing the segment's sales margin percentage by its capital turnover ratio. E. Segmented income statements are also referred to as budget versus actual reports.
Which of the following statements concerning performance evaluation tools used in decentralized operations is correct? A. Performance reports can only be used to evaluate the performance of cost centers. B. A negative residual income indicates that a segment's return on investment is greater than the company's target rate of return. C. Segment margin is calculated by subtracting a segment's total traceable costs from its sales revenue. D. A segment's return on investment can be calculated by dividing the segment's sales margin percentage by its capital turnover ratio. E. Segmented income statements are also referred to as budget versus actual reports.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Transcribed Image Text:Which of the following statements concerning performance evaluation tools used in decentralized operations is correct?
A. Performance reports can only be used to evaluate the performance of cost centers.
B. A negative residual income indicates that a segment's return on investment is greater than the company's target rate of
return.
C. Segment margin is calculated by subtracting a segment's total traceable costs from its sales revenue.
D. A segment's return on investment can be calculated by dividing the segment's sales margin percentage by its capital
turnover ratio.
O E. Segmented income statements are also referred to as budget versus actual reports.
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