Chocolate, Inc., uses rate of return on investment (ROI) as a basis for determining the annual bonus of divisional managers. The firm allocates central corporate expenses to the divisions based on total sales. The calculation of ROI for 2000 for two of its divisions follows:

Indicate several factors that, if present, would bias the ROI measure as Chocolate, Inc., has calculated it and lead to possible inequities in determining the annualbonus.

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Light Chocolate Division Dark Chocolate Division Contribution to Central Corpoate Expenses $100,000 (10,000) g90,000 $600,000 15 Percent 500,000 25,000) S 475,000 $4,750,000 10 Percent and Operating Profit. Divisional Operating Profit. Divisional Investment (assets) ROI