Question 3.20.mark) Big and Happy Ltd is a large business organized and managed with a divisional structure. Two typical divisions are Asia-Pacific and Europe. They are engaged in broadly similar activities and, therefore, central management compares their results in order to make judgments on managerial performance. Both divisions are regarded as investment centers. The following is a summary of last year's financial results of the two divisions: Asia-Pacific 8000 8000 2500 Europe 8000 8000 500 Capital Investment 1,000 400 300 220 212 48 Sales Cost of goods sold: Direct material and labour Indirect manufacturing overhead Gross profit Selling and distribution expenses Profit controllable by divisional manager Allocation of central overhead (uncontrollable) Divisional profit 520 480 180 300 50/ 250 260 140 0 100 20 80 35 profit Selling and distribution expenses Profit controllable by divisional manager Allocation of central overhead (uncontrollable) Divisional profit 480 180 300 50 250 140 40 100 20 80 At the beginning of last year, Asia-Pacific division incurred substantial expenditure on automated production lines and new equipment. Europe has quite old plant. Approximately 50% of the sales of Europe are internal transfers to other divisions within the business. These transfers are based on unadjusted prevailing market price. The inter-divisional transfers of Asia- Pacific are minimal. The management focuses on return on investment as a major performance indicator with a minimum rate of return of 10%. Q3-a For the two divisions, calculate the following (based on controllable profit): 0 Return on investment (ROI) (4 marks) (ii) Residual income (RI) (4 marks) Potivate Windows 2 Save 03 b Comment on the performance of the two divisions, discussing any matters concerned when comparing divisional performance (6 marks) Q3-c entify the FOUR perspectives of performance measurement in a Balanced Scorecard management system. Give two examples of rformance indicators in each perspective of measurement. Use the following format in your answer: Performance indicators Espectives marks)