ABC Fitness is a regional chain of fitness clubs. Each club's manager has the authority to make investments as needed and is evaluated based largely on ROI. ABC Fitness's Brampton club reported the following results for the past year:

Sales

$250,000

Variable costs

162,500

Controllable fixed costs

80,300

Average operating assets

90,000

Instructions

(a) Assume that the manager of the club is able to increase sales by $40,000. Further assume that this is possible without any increase in operating assets or controllable fixed costs. Compute the base-line and the adjusted ROIs. What should the manager do? (8 marks)

(b) Consider the balanced scorecard. Explain what the purpose of the internal process perspective is. Provide an example. (3 marks)

(c) Explain what profit center is. (3 marks)