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    Management Accounting Study Set 6
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    Exam 16: Responsibility Accounting, Performance Evaluation and Transfer Pricing
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    Return on Investment Cannot Be Used Effectively to Evaluate Profit
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Return on Investment Cannot Be Used Effectively to Evaluate Profit

Question 58

Question 58

True/False

Return on investment cannot be used effectively to evaluate profit centres because it motivates managers to make suboptimal decisions from the viewpoint of the organisations' owners.

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