Bell Communications Company has three regional divisions organized as profit centers. The Chief Executive Officer (CEO) evaluates divisional performance, using income from operations as a percent of revenues.
Divisions are treated as investment centers. In recent years, Acme has been running about 11% ROA for the corporation as a whole, and has a cost of capital of 9%.
291407 Organizational Structure and Performance Evaluation Timberline Corporation is a multi-divisional manufacturing company. Each of the two division managers has responsibility for sales, costs and profitability.
Each of the investment centers is run by a divisional manager. The managers are evaluated on the basis of ROI performance. Those managers with the best ROI figures are most likely to be promoted to higher-level corporate positions.
The transfer pricing should improve the overall profitability of the company with the improvement in the performance of the divisions because these are investment centres (Hansen, Mowen and Guan, 2007).
The success of her startup Internet company has motivated her to expand and create two divisions.
Divisions are treated as investment centers. In recent years, Acme has been running about 11% ROA for the corporation as a whole, and has a cost of capital of 9%.
Evaluating Investment Centers with Residual Income [LO 6] Lakeside Hospital is a division of Superior Healthcare organized as an investment center.
The plant and equipment in these divisions are also relatively old and management is not considering much new investment in these divisions.The other category of manufacturing divisions consists of divisions in the ever changing electronics and communications
313779 ROI to measure the performance The Manning Company uses ROI to measure the performance of its operating division. A summary of the annual reports from the two divisions is shown below.