Kelfour Enterprises has divided its operations into two divisions. Relevant accounting data for each division is as follows: Divisions Sales Operating Assets Operating Income Western Division $ 330,000 $ 280,000 $ 33,000 Eastern Division $ 480,000 $ 330,000 $ 34,500
Kelfour Enterprises has divided its operations into two divisions. Relevant accounting data for each division is as follows:
| Divisions | Sales | Operating Assets | Operating Income | ||||||||
| Western Division | $ | 330,000 | $ | 280,000 | $ | 33,000 | |||||
| Eastern Division | $ | 480,000 | $ | 330,000 | $ | 34,500 | |||||
Kelfour has an additional $68,000 of funds to invest. The manager of the Western Division believes that she can invest the funds at a
-
The manager of the Western Division would accept the $68,000 additional investment opportunity because it would increase the Division's RI by $2,720.
-
The manager of the Eastern Division would accept the $68,000 additional investment opportunity because it would increase the Division's RI by $2,720.
-
The CEO would be indifferent because the $68,000 additional investment would increase the RI of the company as a whole regardless of which Division receives the additional investment.
-
All of the answers represent true statements.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
