Page 17 - Manac Costing Test 2 class slides - 3. Performance Measurement
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PERFORMANCE MEASUREMENT
Disadvantages of RI
• The size of the investment is ignored.
• The formula is more difficult to understand.
• Managers may be disgruntled about different
required rates of return.
• The answer is a rand-amount which makes it
difficult to compare different size divisions.
• The short-term view is emphasised.
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