Divisional Performance Measurement: Difference between revisions
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For Example | For Example | ||
{| | {| | ||
Sales|900 | |||
|-less VC|400 | |- | ||
|-CONTRIBUTION+|500|''(note:no good for management performance measurement because Mgr can control FC)'' | less VC|400 | ||
|-less controllable FC|100 | |- | ||
|-CONTROLLABLE PROFIT|400|''(Good for Mgr performance measurement unless it's a profit center they have no control over depreciation)'' | CONTRIBUTION+|500|''(note:no good for management performance measurement because Mgr can control FC)'' | ||
|-less Non-controllable FC|100 | |- | ||
|-DIV PROFIT Before Corp Exp's|300|''(Good measure of Division's economic performance)'' | less controllable FC|100 | ||
|-Corp Exp|100|''(Arbitrary allocation)'' | |- | ||
|-DIV NET PROFIT|200|''(Good measure of comparison with peer companies)'' | CONTROLLABLE PROFIT|400|''(Good for Mgr performance measurement unless it's a profit center they have no control over depreciation)'' | ||
|- | |||
less Non-controllable FC|100 | |||
|- | |||
DIV PROFIT Before Corp Exp's|300|''(Good measure of Division's economic performance)'' | |||
|- | |||
Corp Exp|100|''(Arbitrary allocation)'' | |||
|- | |||
DIV NET PROFIT|200|''(Good measure of comparison with peer companies)'' | |||
|} | |} | ||
Revision as of 08:12, 9 February 2011
A Divisional perfoamnce measurement could look like this:
For Example
Sales|900 less VC|400 CONTRIBUTION+|500|(note:no good for management performance measurement because Mgr can control FC) less controllable FC|100 CONTROLLABLE PROFIT|400|(Good for Mgr performance measurement unless it's a profit center they have no control over depreciation) less Non-controllable FC|100 DIV PROFIT Before Corp Exp's|300|(Good measure of Division's economic performance) Corp Exp|100|(Arbitrary allocation) DIV NET PROFIT|200|(Good measure of comparison with peer companies)See Divisionalization See Residual Income
