Question 1 A company has two divisions, Small and Big. Big Division has net assets of A13 million, and makes an annual profit of N900,000. Small Division has net assets of 400,000 and makes an annual profit of 190,000. The cost of capital for both divisions is 10% and 80% of profits are controllable. Required: Compare the performance of the two divisions using: g ROI b) Residual income c) Comment on your results d) Explain the levels of autonomy/authority in divisionalized organisations ej State the advantages of divisionalization Question 2 The Campus Company is a multidivisional company, and its managers have been delegated full responsibility and complete autonomy to accept and reject transfers from other divisions. Division A produces a sub-assembly with a ready competitive market. One unit of this sub-assembly is currently used by Division B for its final product which is sold externally for 1200. Division A, charges Division B the market price for the sub-assembly, which is A700 per unit. Variable costs are 1520 and $600 for Divisions A and B, respectively. Both divisions have capacity for 1.000 units. The Manager of Division B feels that Division A should transfer the sub-assembly at a lower price. Required: al Compute the contribution for both divisions and the company as a whole. b) is the Manager of Division B likely to accept this price State reasons. C) Assume that Division A can only sell in the open market 500 units at 1700 per unit and a 20% price reduction is necessary to sell full capacity. State three (3) options available to the Manager of Division A and compute the contribution from each option. What would your recommendation be