Divisional Performance Measurement

A Divisional performance 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