Answer (B) is correct . Managerial performance should be evaluated on the basis of those factors controllable by the manager. Managers may control revenues, costs, and/or investment in resources. A well-designed responsibility accounting system establishes responsibility centers within the organization.
Answer (A) is incorrect because Contribution margin ignores the fixed costs of production; managers may control some fixed costs.
Answer (C) is incorrect because Not everything included in the calculation of gross profit is controllable by the manager.
Answer (D) is incorrect because Net income is computed after deducting fixed costs.
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