Cost Accounting Quiz
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PERFORMANCE MEASUREMENT AND CONTROL
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Consolidated Services Inc. has established investment centers for each of its major business units. The Southwest Investment Center reported the following annual results: operating income of $2.4 million on average invested capital of $15 million. However, $300,000 of the operating income came from a one-time asset sale that was mandated by corporate headquarters for cash flow purposes. Additionally, $1.8 million of the invested capital represents corporate-mandated technology infrastructure that the investment center cannot control or redeploy.
For investment center performance evaluation using return on investment (ROI), which calculation most appropriately reflects the manager's controllable performance?
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