Need help on page 105 no 399 bpp revision kit

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July 4, 2020 at 12:02 pm #575939
farhaanm
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for part (a), (1), in the answers
I am confused about the working s about why the depreciation was added to the net profit and also the head office cost.
July 5, 2020 at 9:12 am #576025
John Moffat
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The question specifically says that the ROI is to be calculated using the controllable profit (as is usually the case for the ROI).
The depreciation and the head office costs are controlled by the head office and not by the division.
July 8, 2020 at 4:54 am #576294
farhaanm
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I know it’s controllable profit but the part I am not understanding is the head office cost.
July 8, 2020 at 9:23 am #576311
John Moffat
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The division has no control over head office costs. The head office controls the costs in the head office and can charge the division however much it wants to.
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