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Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C $ 12,120,000 $ 3,030, еее $ 28,120,00e 2$ Sales $ 20,120,000 Average operating assets Net operating income Minimum required rate of return 2$ 24 7,030,000 5,030,000 503,000 %24 496,920 7.00% 449,920 24 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. 2 Accume that cach division is presented with an investment opnortunity that would vield a 8% rate of return

Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C $ 12,120,000 $ 3,030, еее $ 28,120,00e 2$ Sales $ 20,120,000 Average operating assets Net operating income Minimum required rate of return 2$ 24 7,030,000 5,030,000 503,000 %24 496,920 7.00% 449,920 24 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. 2 Accume that cach division is presented with an investment opnortunity that would vield a 8% rate of return

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C $ 12,120, 000 $3,030,000 $4 $ 20,120,000 $ 5,030,000 Sales Average operating assets Net operating income Minimum required rate of return $28,120,000 7,030,000 449,920 $ 2$ 496,920 2$ 7.50% 503,000 10.00% 7.00% 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? es Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Ji..-. Prev 13 of 13 Next o search
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 $ 12,120, 000 $3,030,000 $4 $ 20,120,000 $ 5,030,000 Sales Average operating assets Net operating income Minimum required rate of return $28,120,000 7,030,000 449,920 $ 2$ 496,920 2$ 7.50% 503,000 10.00% 7.00% 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? es Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Ji..-. Prev 13 of 13 Next o search
b. If performance is being measured by residual income, which division or divisions will probably accept the oppor Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Compute the residual income (loss) for each đivision. (Do not round intermediate calculations. Loss amounts should be indicated by a minus sign.) Division A Division B Division C Residual income (loss) 24 16 $4 6. $4 10 < Req 1 Req 3A > < Prev 13 of 13 Next earch 近
Transcribed Image Text:b. If performance is being measured by residual income, which division or divisions will probably accept the oppor Complete this question by entering your answers in the tabs below. Req 1 Req 2 Req 3A Req 3B Compute the residual income (loss) for each đivision. (Do not round intermediate calculations. Loss amounts should be indicated by a minus sign.) Division A Division B Division C Residual income (loss) 24 16 $4 6. $4 10 < Req 1 Req 3A > < Prev 13 of 13 Next earch 近
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