Learning Objectives

1. Differentiate between cost centres, profit centres, and investment centres, and explain how performance is measured in each.
2. Prepare a segmented income statement using the contribution format, and explain the difference between traceable fixed costs and common fixed costs.
3. Identify three business practices that hinder proper cost assignment.
4. Analyze variances from revenue targets.
5. Analyze marketing expenses using cost drivers.
6. Compute the return on investment (ROI).
7. Show how changes in sales, expenses, and assets affect an organization's ROI.
8. Compute residual income and understand the strengths and weaknesses of this method of measuring performance.
9. (Appendix 12A) Determine the range, if any, within which a negotiated transfer price should fall.