1.1 What is the contribution?

1.2 What is the controllable profit?

1.3 What is the divisional profit/loss?

1.4 What is the return on investment?

1.5 What is the residual income?

Study the scenario and complete the questions that follow: Maxmore South Africa Maxmore South Africa, a division of Maxmore (Pty) Ltd. reported the following results: Sales revenue: R2 232 000 Variable expenses: R516 000 Non-controllable divisional fixed expenses: R252 000 Controllable divisional fixed expenses: R384 000 Apportioned cost of common expenses: R312 000 Divisional investment: R5 120 000 The business has a cost of capital of 8% a year. Fixed expenses consist of the following: R Insurance on buildings Insurance on equipment Depreciation on equipment Supervisors' salaries 11 760 6 240 234 000 384 000 636 000 The division use the following information to allocate the overheads among its various departments: Departments Cost driver Production A Production B Service Total Number of employees 42 54 12 108 Value of equipment (R) 62 000 56 000 38 000 156 000 Floor space (m) 2 600 2 200 600 5 400 Machine hours 6 250 3750 10 000 The costs of the service department are allocated to the production departments according to machine hours and overhead allocation rates are based on labour hours. Source: Daniels. JC (2021)