Virtual Company (VC) is an industrial company with three divisions. Both the Central Division and the East Division are long established. Senior managers are concerned that these divisions have a high percentage of products that are near the end of their product life-cycle. Forecast sales increases over the next 5 years is expected to be in the region of 45% per annum. The Southwest Division was acquired in 2019 and senior managers are optimistic that this division has very good growth potential. Most of the senior managers at this division have experience of working at the other divisions. Since 2019 the head office has ranked all divisions according to return on investment (ROI) and residual income (RI). All managers believe that the rankings are important for future promotions and career development. A small number of other performance measures are also used by managers, such as Customers: Customer complaints (percentage of total number of customers) These performance measures were agreed by all managers in 2019. At the time it was thought that managers should focus on only a small number of measures. 2022 The managers at the divisions provided the following information for the head office, Selected data from the budgeted Management Accounts to 31 December 2022 The head office has estimated that the group cost of capital is 10%. Ranking divisions in 2020 In 2020 the data on controllable and non-controllable costs and investments will be used to rank divisions. Questions Question 1 Based on the data provided comment on the relative financial performance of the three divisions and discuss how the ranking of the divisions changes if controllable and noncontrollable costs are analysed. Question 2 Evaluate the choice of performance measures for the 3 divisions Question 3 Discuss how using ROI can result in managers making poor investment decisions. Question 4 Discuss the particular problems companies with multiple divisions have when evaluating the performance of divisions