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 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.

AppendixLO1