elected sales and operating data for three divisions of different structural engineering firms are given below: Division B $ 28,360,000 $ 7,090,000 $ 453,760 7.50% Division C $ 25,450,000 $ 5,090,000 $ 636,250 12.50% Sales Average operating assets Division A $ 12,360,000 $ 3,090,000 $ 494,400 7.00% Net operating income Minimum required rate of return equired: Compute each division's margin, turnover, and return on investment (ROI). Compute each division's residual income (loss). Assume each division is presented with an investment opportunity yielding a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will accept the opportunity? b. If performance is being measured by residual income, which division or divisions will accept the opportunity?
elected sales and operating data for three divisions of different structural engineering firms are given below: Division B $ 28,360,000 $ 7,090,000 $ 453,760 7.50% Division C $ 25,450,000 $ 5,090,000 $ 636,250 12.50% Sales Average operating assets Division A $ 12,360,000 $ 3,090,000 $ 494,400 7.00% Net operating income Minimum required rate of return equired: Compute each division's margin, turnover, and return on investment (ROI). Compute each division's residual income (loss). Assume each division is presented with an investment opportunity yielding a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will accept the opportunity? b. If performance is being measured by residual income, which division or divisions will accept the opportunity?
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 16E
Related questions
Question
![Selected sales and operating data for three divisions of different structural engineering firms are given below:
Division C
$ 25,450,000
$ 5,090,000
$636,250
12.50%
Sales
Average operating assets
Net operating income
Minimum required rate of return
Division A
$ 12,360,000
$ 3,090,000
$ 494,400
7.00%
Required:
1. Compute each division's margin, turnover, and return on investment (ROI).
2. Compute each division's residual income (loss).
3. Assume each division is presented with an investment opportunity yielding a 8% rate of return.
a. If performance is being measured by ROI, which division or divisions will accept the opportunity?
b. If performance is being measured by residual income, which division or divisions will accept the opportunity?
Division B
$ 28,360,000
$ 7,090,000
$ 453,760
7.50%
Complete this question by entering your answers in the tabs below.
Division A
Division B
Division C
Required 1 Required 2 Required 3A Required 3B
Assume each division is presented with an investment opportunity yielding a 8% rate of return. If performance is being
measured by residual income, which division or divisions will accept or reject the opportunity?
< Required 3A
Required 3B >](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb3ed8f34-39e2-4a96-a5c2-3eabbcd980bb%2Fde54143b-d7ed-47a1-84da-0dad0a5c670e%2Fec2sb2_processed.png&w=3840&q=75)
Transcribed Image Text:Selected sales and operating data for three divisions of different structural engineering firms are given below:
Division C
$ 25,450,000
$ 5,090,000
$636,250
12.50%
Sales
Average operating assets
Net operating income
Minimum required rate of return
Division A
$ 12,360,000
$ 3,090,000
$ 494,400
7.00%
Required:
1. Compute each division's margin, turnover, and return on investment (ROI).
2. Compute each division's residual income (loss).
3. Assume each division is presented with an investment opportunity yielding a 8% rate of return.
a. If performance is being measured by ROI, which division or divisions will accept the opportunity?
b. If performance is being measured by residual income, which division or divisions will accept the opportunity?
Division B
$ 28,360,000
$ 7,090,000
$ 453,760
7.50%
Complete this question by entering your answers in the tabs below.
Division A
Division B
Division C
Required 1 Required 2 Required 3A Required 3B
Assume each division is presented with an investment opportunity yielding a 8% rate of return. If performance is being
measured by residual income, which division or divisions will accept or reject the opportunity?
< Required 3A
Required 3B >
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