Explain the benefits of a Residual Income structure within an investment center framework.
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Explain the benefits of a Residual Income structure within an investment center framework.
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- Differentiate between a profit center and an investment center.Explain the benefits of a return on investment structure within an investment center framework. It may help to think of an example using an existing company.A responsibility center structure that considers investments made by the operating segments by using a common cost of capital percentage is called_______. A. return on investment B. residual income C. a profit center D. a discretionary cost center
- What is the major shortcoming of using operating income as a performance measure for investment centers?Show and contrast how return on investment and residual income are used to evaluate the performance of investment centers.Explain and compare how return on investment and residual income are used to evaluate investment center performance
- Demonstrate and compare how return on investment and residual income are used to assess the success of investment centers.Explain the benefits of a Return-on-Investment structure within an investment center framework.What is the main drawback of using income from operations to measure the effectiveness of investment centers?
- What is the primary disadvantage of utilizing revenue from operations to evaluate investment centers' performance?Which of the following is not a measure that management can use in evaluating and controlling investment center performance? a.residual income b.negotiated price c.income from operations d.rate of return on investmentWhat is the preferred method of calculating investment turnover, residual income, and return on investment used by the investment center manager? Why is it so well-liked? And why is one chosen over the other? Explain briefly.