Final answer:
A Performance Report is most useful to management for their control function because it allows them to compare actual performance against budgeted targets, identify variances, and make relevant adjustments for operational control.
Step-by-step explanation:
The most useful tool to management in exercising their control function is B) Performance Report. A performance report is critical as it compares the actual results with the budgeted figures, highlighting variances which signal management to any areas that may require attention or adjustment. These reports often include data on sales, expenses, and other key performance indicators that can be compared against what was planned or expected. In contrast, while budgets are essential for planning and annual reports provide a broad overview of a company's operations and financial conditions for stakeholders, they are not as directly actionable for management control purposes on a regular basis. Similarly, income tax reports are essential for compliance but don't provide the day-to-day operational insight necessary for performance management.