The company has two divisions, A and B. Each division operates independently from the Head Office and divisional managers have considerable autonomy to make investment decisions. Divisional performance is measured using return on investment (ROI). This is computed using the controllable profit and average net assets of each division.

It is considering using residual income (RI) as an alternative measure of divisional performance.

A draft profit statement for last year:

	A Division	B Division
	$000	$000
Revenue	1180	1380
Variable costs	415	690
Contribution	765	690
Fixed costs	245	310
Profit	520	380
Average assets	2824	3416
Depreciation (included in fixed costs)	57	77.5
Head office charge (Note 2)	31.5	90
Cost of capital (%)	12.5	9.25
Depreciation on non-controlled assets as % of full charge - see Note 1	10	30

Notes: 1) Some of the depreciation included above relates to depreciation on assets which are not controlled operationally by the divisions. 2) Head Office charges are charged to each division based on an old agreement, with the allocation agreed between Head Office and divisions at that time.

Based on the data given above, complete the gaps below to calculate the ROI for each division.

	Division A	Division B
	$000	$000
Profit (given)
Add back
Depreciation
Head office costs
Controllable profit
ROI (%)

Calculate the RI for each division.

	Division A	Division B
	$000	$000
Controllable profit
Capital charge
Residual Income