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Dear Sir.
What is allocated central costs, what does it mean?
why we are adding with controllable profit, when we are calculating ROI
Kindly assist me c
*After* which elements would the
Operating profit come.
I know that it’s before interest and tax but
I’m not very clear in that part
I’m like confusedAllocated central costs are head office costs which are then shared between the divisions.
When calculating the ROI (and RI) we only take the controllable profit (i.e. after those expenses that are controlled by the division).
These are both explained in my free lectures. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
Operating profit is the sales less the cost of sales, less the expenses of running the business.
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