Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A $ 12,640,000 $ 3,160,000 $ 606,720 10. 00% Division B $ 35,800,000 $ 7,160,000 $ 608,600 Division C $ 20,640,000 $ 5,160,000 $ 577,920 11.20% Sales Average operating assets Net operating income Minimum required rate of return 10.50% 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 11% 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. Reg 1 Req 2 Reg 3A Req 38 Compute the margin, turnover, and return on investment (ROI) for each division. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Margin Turnover ROI Division A % % Division B Division C % % % %

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
Division C
$ 20,640,000
$ 5,160,000
$ 577,920
11.20%
Division A
$ 12,640,000
$ 3,160,000
$ 606,720
10.00%
Division B
$ 35,800,000
$ 7,160,000
$ 608,600
Sales
Average operating assets
Net operating income
Minimum required rate of return
10.50%
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 11% 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.
Reg 1
Req 2
Reg 3A
Reg 3B
Compute the margin, turnover, and return on investment (ROI) for each division. (Do not round intermediate calculations.
Round your answers to 2 decimal places.)
Margin
Turnover
ROI
%
%
%
Division A
%
Division B
%
Division C
%
Transcribed Image Text:Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division C $ 20,640,000 $ 5,160,000 $ 577,920 11.20% Division A $ 12,640,000 $ 3,160,000 $ 606,720 10.00% Division B $ 35,800,000 $ 7,160,000 $ 608,600 Sales Average operating assets Net operating income Minimum required rate of return 10.50% 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 11% 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. Reg 1 Req 2 Reg 3A Reg 3B Compute the margin, turnover, and return on investment (ROI) for each division. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Margin Turnover ROI % % % Division A % Division B % Division C %
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