Divisional Performance Measurement: Difference between revisions
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A Divisional | A Divisional performance measurement could look like this: | ||
For Example | For Example | ||
{| | |||
| | {| border="1" align="center" style="text-align:left;" | ||
|-less VC|400 | |Sales | ||
|-CONTRIBUTION+|500|'' | |900.00 | ||
|-less controllable FC|100 | |- | ||
|-CONTROLLABLE PROFIT|400|'' | |less VC | ||
|-less Non-controllable FC|100 | |400.00 | ||
|-DIV PROFIT Before Corp Exp's|300|'' | |- | ||
|-Corp Exp|100|'' | |CONTRIBUTION+ | ||
|-DIV NET PROFIT|200|'' | |500.00 | ||
|''No good for management performance measurement because Mgr can control FC'' | |||
|- | |||
|less controllable FC | |||
|100.00 | |||
|- | |||
|CONTROLLABLE PROFIT | |||
|400.00 | |||
|''Good for Mgr performance measurement unless it's a profit center they have no control over depreciation'' | |||
|- | |||
|less Non-controllable FC | |||
|100.00 | |||
|- | |||
|DIV PROFIT Before Corp Exp's | |||
|300.00 | |||
|''Good measure of Division's economic performance'' | |||
|- | |||
|Corp Exp | |||
|100.00 | |||
|''Arbitrary allocation'' | |||
|- | |||
|DIV NET PROFIT | |||
|200.00 | |||
|''Good measure of comparison with peer companies'' | |||
|} | |} | ||
See [[Divisionalization]] | *See [[Divisionalization]] | ||
See [[Residual Income]] | *See [[Residual Income]] | ||
*See [[Performance Pyramid]] | |||
[[Category:Finance]] | [[Category:Finance]] | ||
Latest revision as of 15:49, 19 September 2012
A Divisional performance measurement could look like this:
For Example
| Sales | 900.00 | |
| less VC | 400.00 | |
| CONTRIBUTION+ | 500.00 | No good for management performance measurement because Mgr can control FC |
| less controllable FC | 100.00 | |
| CONTROLLABLE PROFIT | 400.00 | Good for Mgr performance measurement unless it's a profit center they have no control over depreciation |
| less Non-controllable FC | 100.00 | |
| DIV PROFIT Before Corp Exp's | 300.00 | Good measure of Division's economic performance |
| Corp Exp | 100.00 | Arbitrary allocation |
| DIV NET PROFIT | 200.00 | Good measure of comparison with peer companies |
- See Divisionalization
- See Residual Income
- See Performance Pyramid
