Divisional Performance Measurement: Difference between revisions
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{| border="1" align="center" style="text-align:center;" | {| border="1" align="center" style="text-align:center;" | ||
|Sales | |Sales | ||
|900 | |900.00 | ||
|- | |- | ||
|less VC | |less VC | ||
|400 | |400.00 | ||
|- | |- | ||
|CONTRIBUTION+ | |CONTRIBUTION+ | ||
|500 | |500.00 | ||
|''( | |''(No good for management performance measurement because Mgr can control FC)'' | ||
|- | |- | ||
|less controllable FC | |less controllable FC | ||
|100 | |100.00 | ||
|- | |- | ||
|CONTROLLABLE PROFIT | |CONTROLLABLE PROFIT | ||
|400 | |400.00 | ||
|''(Good for Mgr performance measurement unless it's a profit center they have no control over depreciation)'' | |''(Good for Mgr performance measurement unless it's a profit center they have no control over depreciation)'' | ||
|- | |- | ||
|less Non-controllable FC | |less Non-controllable FC | ||
|100 | |100.00 | ||
|- | |- | ||
|DIV PROFIT Before Corp Exp's | |DIV PROFIT Before Corp Exp's | ||
|300 | |300.00 | ||
|''(Good measure of Division's economic performance)'' | |''(Good measure of Division's economic performance)'' | ||
|- | |- | ||
|Corp Exp | |Corp Exp | ||
|100 | |100.00 | ||
|''(Arbitrary allocation)'' | |''(Arbitrary allocation)'' | ||
|- | |- | ||
|DIV NET PROFIT | |DIV NET PROFIT | ||
|200 | |200.00 | ||
|''(Good measure of comparison with peer companies)'' | |''(Good measure of comparison with peer companies)'' | ||
|} | |} | ||
Revision as of 08:30, 9 February 2011
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
