Divisional Performance Measurement
From Wikireedia
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