Answer (C) is correct. Managerial performance should ideally be evaluated only on the basis of those factors controllable by the manager. Managers may control revenues, costs, and/or investments in resources. However, controllability is not an absolute. More than one manager may be able to influence a cost, and managers may be accountable for some costs they do not control. In practice, given the difficulties of determining the locus of controllability, responsibility may be assigned on the basis of knowledge about the incurrence of a cost rather than the ability to control it. Accordingly, a successful system is dependent upon the proper delegation of responsibility and the commensurate authority.