way a manager could improve turnover

Which of the following statements regarding responsibility accounting systems is true? O Residual income is best used when evaluating the performance of profit centers rather than investment centers. An advantage of using return on investment to evaluate performance is that it encourages managers to increase both operating assets and operating income. O The use of residual income as a performance measure may lead segment managers to reject investments in projects that would be favorable for the company as a whole. O Residual income is a less effective metric for evaluating performance if there are significant differences in the size of the operating segments. O None of the above statements is true.

A good performance measurement system should have the following characteristics: It should be based on activities over which managers have control or influence. It should be measurable. It should be timely. It should be consistent in its application. When appropriate, the actual results should be compared with the budgeted results, standards, or past performance. The measurements must not favor the manager over the goals of the entire organization. Often, managers have the ability to make decisions that favor their individual units but that may be detrimental to the overall performance of the organization. True / False

Residual income should be used over return on investment (ROI) to evaluate managers’ performance because: Group of answer choices Residual income can be calculated more accurately than ROI. ROI is a ratio, but residual income is expressed in dollars. Residual income is more likely to align a division’s goal with the company’s goal. ROI is complicated to calculate.