E. Types of Responsibility Centers. 1. There are three basic types of responsibility centers (describe each): a. b. c. 2. a. Responsibility Reports. The evaluation of a manager's performance for cost centers is based on his or her ability to meet budgeted goals for controllable costs. Report to evaluate the performance of a profit center manager is prepared using the cost-volume- profit income statement. In the report: (1) (2) 3) 3. The primary basis for evaluating the performance of a manager of an investment center is return on investment (ROI). a. b. D. Principles of Performance Evaluation. 1. Management by exception means that 2. For management by exception to be effective, there must be guidelines for identifying an exception. The usual criteria are: a. b. 3. Behavioral principles include: a. b. c. d. e. 4. Performance evaluation reports under responsibility accounting should be based on certain reporting principles: a. b. c. d. e. 5. A responsibility reporting system involves the preparation of a report for a. b