Mar/Jun 16 Q1 part iii – Flack supermarket

Hi Sir,

The question asks to assess the proposal to change the divisional performance measure”. Part of the answer is mentioning about not investing in refurbishing their stores which may reduce the depreciation charge that could make the operating profit higher, so that the manager is prioritising new store capital expenditure over the refurbishment. I’m unable to understand well on this and how it benefits to. Please help explain more on this. Thanks.