MANAGERIAL ACCOUNTING

Tom is a division manager of a company. His division is doing gardening services. Tom can make the 5. following decisions: * where to buy chemicals from * who to hire as workers and wages * advertising * pricing of various gardening services * purchasing or disposing of equipments such as lawn mowers, trimmi The division is a(n): A. cost center. B. profit center. C. investment center. D. revenue center. 6. Which of the following is not true of performance measures? A. Return on investment is used for investment centers and residual income is used for profit centers. B. When comparing performances of different investment centers, return on investment should be used. C. Economic value added is a variant of residual income. D. Using residual income prevents the possibility of good projects being rejected by investment centers. 7. Which of the following is not true of "investment? A. It means investment in net operating assets. B. It represents the amount of resources used in operation. C. The more investment a division has, the more dollar income the division is supposed to generate. D. If everything else remains the same, as investment increases, residual income will go up