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Subject P2: Advanced Management Accounting

6.3 The following data relate to the operational performance of the four divisions of
Bram Limited.

Profit Net assets
$000 $000
Division A 320 1,600

Division B 400 2,500
Division C 250 1,300
Division D 80 320

Using residual income to evaluate performance, with a 15% cost of
capital, which division appears most successful?

A Division A

B Division B

C Division C

D Division D

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