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 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.
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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