10.2 Measures are required to assess the performance of divisions and of divisional managers.

Three financial measures are

■ contribution;

■ controllable profit; and

■ return on investment (ROI).

Required:

(a) For each of the these measures explain

■ the way in which each measure is calculated;

■ for what purpose they are most suitably applied; and

■ the weaknesses of each method.

(b) Suggest three different non-financial measures of performance that may be appropriate to an operating division and consider how such measures, in general, offer improvements when used in conjunction with financial measures.