=+20-23 KK ROI, RI, measurement of assets (CMA, adapted) OBJECTIVES 3, 4 Benson Ltd recently announced a bonus plan to be awarded to the manager of the most profitable division. The three division managers are to choose whether ROI or RI will be used to measure profitability. In addition, they must decide whether investment will be measured using gross book value or net book value of assets. Benson Ltd defines income as operating profit and investment as total assets. The following information is available for the year just ended:

Division Gross book value of assets Accumulated depreciation Operating profit Qld $1 050 000 $155 000 $175 000 NSW 250 000 35 000 65 500 WA 750 000 580 000 57 500 Benson Ltd uses a required rate of return of 11% on investment to calculate RI.

Required Each division manager has selected a method of bonus calculation that ranks his or her division number 1. Identify the method for calculating profitability that each manager selected, supporting your answer with appropriate calculations. Comment on the strengths and weaknesses of the methods chosen by each manager.