Question 2: Conventional and Strategic performance measurement system (TOTAL: 25 marks) Total Plus Limited is a decentralised organisation which has three divisions: A, B, and C. Corporate management desires a minimum return of 14 percent on its investments and has a 30 percent tax rate with an average cost of capital of 10 percent. Assume cost of capital is tax adjusted. The division's 2020 results were as follows: Division Net Assets A Income $150,000 $250,000 $110,000 Return on Investment Residual (ROI) Income (RI) 15% $10,000 20% $75,000 22% $40,000 $1,000,000 $1,250,000 $500,000 B C The company is planning an expansion project in 2021 that will cost $250,000 and return $45,000 per year. + Required: 2.1: Management of Total Plus is puzzled in choosing between ROI and RI to evaluate divisional performances. Write a memo to the management commenting on the performances of different divisions in 2020 and the appropriateness of different methods (ROI vs RI) for the organisation. (9 marks) Your Answer (Expand the space as required)