Professional Documents
Culture Documents
Chapter 10
Objective 1
Understand decentralization and describe
different types of responsibility centers
Consumer markets
• Sales margin $2,675 / $21,400 = 12.5%
• Capital turnover $21,400 / $10,700 = 2.0
• ROI 12.5% x 2.0 = 25%
Performance markets
• Sales margin $4,810 / $18,500 = 26.0%
• Capital turnover $18,500 / $18,500 = 1.0
• ROI 26.0% x 1.0 = 26.0%
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Residual Income
• Determines whether the division has created
any excess (residual) income above
management’s expectations
• Incorporates target rate of return
• Financial
• Customer
• Internal business
• Learning and growth
• Sustainability—Related KPIs
• Fifth perspective—“Sustainability”
• Sixth perspective—“Community”