Various Measures of Profitability When the Coronet Company formed three divisions a year ago, the president told the division managers that a bonus would be paid to the most profitable division. However, absolute profit as conventionally computed would not be used. Instead, the ranking would be affected by the relative investments in the three divisions. Each manager has now written a memorandum claiming that he is entitled to the bonus. The following data are available:

NET INCOME AS COMPUTED FOR CONVENTIONAL EXTERNAL GROSS BOOK VALUE ANNUAL REPORT DIVISION AT START OF YEAR COMPILATION X $400,000 $47,500 Y, 380,000 46,000 Z 250,000 30,800 All the assets are fixed assets that were purchased ten years ago and have ten years of usefulness remaining. The Coronet cost of capital is 10 percent. All computations of current return should be based on a balance at the start of the year.
Which method for computing profitability did each manager choose?
Make your description specific and brief. Show supporting computations.
Where applicable, assume straight-line depreciation.