Economics · Performance Management
Mal Co is considering setting up another division selling expensive watches. The two divisions would be run as profit centres, with head office costs being allocated to each division. Managers' bonuses will be dependent on the divisions meeting their targets. Targets being considered are: (i) Gross profit percentage (ii) Contribution (iii) Net profit for the division (iv) Return on capital employed Which targets should be used to assess the performance of the divisional manager and provide motivation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1All of them
- 2(iii) and (iv) only
- 3(i) and (ii) only✓
- 4(iv) only
Correct answer
(i) and (ii) only
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