Measures are required to assess the performance of divisions and of divisional managers. Three financial measures are l contribution;

• controllable profit; 

• return on investment (ROI).

Required:

(a) For each of the above measures explain l the way in which each measure is calculated;

• for what purpose they are most suitably applied;

• 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.