Required information [The following information applies to the questions displayed below.] Megamart provides the following information on its two investment centers. Investment Center Electronics Income $ 3,114,000 2,261,000 Average Assets $ 17,300,000 13,300,000 Sporting goods Sales $ 41,520,000 18,088,000 1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? 2. Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most residual income? 3. Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 11%. Complete this question by entering your answers in the tabs below.

Principles of Accounting Volume 2
19th Edition
ISBN:9781947172609
Author:OpenStax
Publisher:OpenStax
Chapter12: Balanced Scorecard And Other Performance Measures
Section: Chapter Questions
Problem 3EB: Identify the type of responsibility center (revenue center, cost center, profit center, or...
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Required information
[The following information applies to the questions displayed below.]
Megamart provides the following information on its two investment centers.
Investment Center
Electronics
Income
$ 3,114,000
2,261,000
Average Assets
$ 17,300,000
13,300,000
Sporting goods
Sales
$ 41,520,000
18,088,000
1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate
income?
2. Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most
residual income?
3. Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the
new investment opportunity be accepted? The target return is 11%.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to
generate income?
Numerator:
Return on Investment
I
I
1
Denominator:
Electronics
Sporting Goods
Which center is most efficient at using assets to generate income?
< Required 1
= Return on Investment
=
Electronics
Required 2 >
0
0
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] Megamart provides the following information on its two investment centers. Investment Center Electronics Income $ 3,114,000 2,261,000 Average Assets $ 17,300,000 13,300,000 Sporting goods Sales $ 41,520,000 18,088,000 1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? 2. Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most residual income? 3. Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 11%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Numerator: Return on Investment I I 1 Denominator: Electronics Sporting Goods Which center is most efficient at using assets to generate income? < Required 1 = Return on Investment = Electronics Required 2 > 0 0
Required information
[The following information applies to the questions displayed below.]
Megamart provides the following information on its two investment centers.
Investment Center
Electronics
Average Assets
$ 17,300,000
13,300,000
Sporting goods
Sales
$ 41,520,000
18,088,000
1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate
income?
Income
$ 3,114,000
2,261,000
2. Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most
residual income?
3. Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the
new investment opportunity be accepted? The target return is 11%.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2 Required 3
Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the
most residual income?
Investment Center
Electronics
Income
Less target income
Residual income
Which center generated the most residual income?
Sporting Goods
Electronics
< Required 1
Required 3 >
Transcribed Image Text:Required information [The following information applies to the questions displayed below.] Megamart provides the following information on its two investment centers. Investment Center Electronics Average Assets $ 17,300,000 13,300,000 Sporting goods Sales $ 41,520,000 18,088,000 1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income $ 3,114,000 2,261,000 2. Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most residual income? 3. Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 11%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most residual income? Investment Center Electronics Income Less target income Residual income Which center generated the most residual income? Sporting Goods Electronics < Required 1 Required 3 >
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