Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A $ 12,120, 000 $ 3,030,00e 2$ Division B Division C $ 28,120,000 7,030,000 449,920 $ 20,120,000 $ 5,030,000 Sales Average operating assets Net operating income Minimum required rate of return %2$ 2$ 496,920 24 503,000 10.00% 7.00% 7.50% Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunit Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A $ 12,120, 000 $ 3,030,00e 2$ Division B Division C $ 28,120,000 7,030,000 449,920 $ 20,120,000 $ 5,030,000 Sales Average operating assets Net operating income Minimum required rate of return %2$ 2$ 496,920 24 503,000 10.00% 7.00% 7.50% Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunit Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Compute requirements 1-3 and a-b
Transcribed Image Text:Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
Division A
Division B
Division C
$ 20,120,000
5,030,000
503,000
$ 28,120,000
$ 12,120,000
$ 3,030,00e
496,920
7.00%
Sales
$4
7,030, 000
2$
Average operating assets
Net operating income
Minimum required rate of return
449,920
$4
7.50%
10.00%
Required:
1. Compute the margin, turnover, and return on investment (ROI) for each division.
2. Compute the residual income (loss) for each division.
3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return.
a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity?
b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity
Complete this question by entering your answers in the tabs below.
Req 1
Req 2
Req 3A
Req 3B
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