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QUESTION 12 The Segmented Profit and Loss Statement for ADS Luxury Ltd is presented below. Clothing Division Footwear Division Sales Revenue $419,200 $515,500 Less: Variable
QUESTION 12 The Segmented Profit and Loss Statement for ADS Luxury Ltd is presented below. Clothing Division Footwear Division Sales Revenue $419,200 $515,500 Less: Variable Costs $154.000 $240,400 Contribution Margin $265,200 $275,100 Less: Traceable Fixed Costs $63,950 $73,850 Division Segment Margin $201.250 $201.250 Less: Common Fixed Costs Total Company $934,700 $394 400 $540,300 $137,800 $402.500 $82,500 $320,000 Net Profit The CEO is considering a special targeted social media marketing campaign which will cost $70,500 but only one division's products can be featured as part of the campaign. The company's marketing department advise that sales for either division would increase by $180,000 as a result of the campaign. The CEO believes that since both divisions have the same segment margin, the company will be equally as well off regardless of which division is featured Relevant Formula Relevant Formula Contribution Margin Ratio - Contribution Margin / Sales Segment Margin Ratio = Segment Margin / Sales Residual Income = Net Profit - (Net Operating Assets x Minimum Rate of Return) Return on Investment (ROI) - Net Profit/ Net Operating Assets Required: a) Do you agree or disagree with the CEO? Provide reasons to support your answer. (1 mark) b) Which division do you believe should be featured in the marketing campaign? What would the total company net profit become if this division was featured? Support your answer with calculations. (2 marks) Important: Round to the nearest 2 decimal places for numbers used in calculations. c) The CEO wants to design a more effective performance management system to evaluate the performance of the Division Managers beyond simply using financial measures. Provide at least two possible non-financial indicators that can be used to evaluate the performance of these managers and explain why these indicators are better than traditional financial measures. (2 marks) Alate. Dochowall arrivandaar die tibb
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