=+SA 24-4 Evaluating division performance over time 1128 Chapter 24 Performance Evaluation for Decentralized Operations The Apparel Division currently has $30,000,000 in invested assets, and Casual Living Inc.’s overall rate of return on investment, including all divisions, is 8%. Each division manager is evaluated on the basis of divisional rate of return on investment, and a bonus equal to $9,000 for each percentage point by which the division’s rate of return on investment exceeds the company average is awarded each year.

The president is concerned that the manager of the Apparel Division rejected the addition of the new product line, when all estimates indicated that the product line would be profitable and would increase overall company income. You have been asked to analyze the possible reasons why the Apparel Division manager rejected the new product line.