Divisional Performance Measurement: Difference between revisions
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| Line 12: | Line 12: | ||
|CONTRIBUTION+ | |CONTRIBUTION+ | ||
|500.00 | |500.00 | ||
|'' | |''No good for management performance measurement because Mgr can control FC'' | ||
|- | |- | ||
|less controllable FC | |less controllable FC | ||
| Line 19: | Line 19: | ||
|CONTROLLABLE PROFIT | |CONTROLLABLE PROFIT | ||
|400.00 | |400.00 | ||
|'' | |''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 | ||
| Line 26: | Line 26: | ||
|DIV PROFIT Before Corp Exp's | |DIV PROFIT Before Corp Exp's | ||
|300.00 | |300.00 | ||
|'' | |''Good measure of Division's economic performance'' | ||
|- | |- | ||
|Corp Exp | |Corp Exp | ||
|100.00 | |100.00 | ||
|'' | |''Arbitrary allocation'' | ||
|- | |- | ||
|DIV NET PROFIT | |DIV NET PROFIT | ||
|200.00 | |200.00 | ||
|'' | |''Good measure of comparison with peer companies'' | ||
|} | |} | ||
Revision as of 08:32, 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
