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Mims Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisional managers are to decide which
Mims Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisional managers are to decide which performance measure will be used to evaluate profitability. Mims Corporation requires a 10% minimum return on investment. The following information is available for the year just ended. Divisional Operating Divisional Operating Division Assets Income Invested Capital Return on Residual Investment Income Economic Value Added Ashton $900,000 $99,000 $200,000 11.0% $9,000 $53,300 Drye 820,000 94,300 75,000 11.5% 12,300 60,010 Poole 480,000 57,600 120,000 12.0% 9,600 30,720 m T (d) What measure will each division manager select? What should the upper management of Mims Corporation do? B I U T T Ix !!! III 99 O Word(s)
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