Divisional Performance Measurement
From Wikireedia
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
