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Estes Company has assembled the following data for its divisions for the past year: Average operating assets. Sales Net operating income Turnover... Margin Minimum required rate of return Residual income..... Division B's return on investment is: O $6,000 32% O 20% 16% Division A Division B $500,000 ? ? $100,000 1.25 ? 14% ? $520,000 $20,300 4 3.9% ? $6,000

Estes Company has assembled the following data for its divisions for the past year: Average operating assets. Sales Net operating income Turnover... Margin Minimum required rate of return Residual income..... Division B's return on investment is: O $6,000 32% O 20% 16% Division A Division B $500,000 ? ? $100,000 1.25 ? 14% ? $520,000 $20,300 4 3.9% ? $6,000

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Estes Company has assembled the following data for its divisions for the past year: Average operating assets.. Sales ..... Net operating income. Turnover.... Margin......... Minimum required rate of return ..... Residual income.......... Division B's return on investment is: $6,000 32% 20% 16% Division A Division B $500,000 ? ? $100,000 1.25 ? 14% ? $520,000 $20,300 4 3.9% ? $6,000
Transcribed Image Text:Estes Company has assembled the following data for its divisions for the past year: Average operating assets.. Sales ..... Net operating income. Turnover.... Margin......... Minimum required rate of return ..... Residual income.......... Division B's return on investment is: $6,000 32% 20% 16% Division A Division B $500,000 ? ? $100,000 1.25 ? 14% ? $520,000 $20,300 4 3.9% ? $6,000
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