Demons Ltd has two retail divisions, which reported the following results for the financial year ending 30 June 2019.

Computer Television Contribution margin $650 000 $200 000 Controllable margin $450 000 $100 000 Average operating assets 3 000 000 500 000 Return on Investment (ROI) 15% 20%

Required: (a) Based on the ROI information provided above, which division was more successful? Explain your answer. Explain also whether you agree with this conclusion. (6 marks) (b) Calculate each divisions Residual Income if the firms minimum required rate of return is 12%. (4 marks) (c) In what way can the use of ROI as a performance measure lead to bad decisions? How does the RI approach overcome this problem?