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Selected sales and operating data for three divisions of different structural engineering firms are given below: Division B. $35,200,000 $7,040,000. $ 563,200 9.50% Division C $ 25,200,000 $ 5,040,000 $ 655,200 13.00% Sales Average operating assets. Net operating income Minimum required rate of return Required: Division A $ 15,200,000 $ 3,040,000 $ 668,800 9.00%

Selected sales and operating data for three divisions of different structural engineering firms are given below: Division B. $35,200,000 $7,040,000. $ 563,200 9.50% Division C $ 25,200,000 $ 5,040,000 $ 655,200 13.00% Sales Average operating assets. Net operating income Minimum required rate of return Required: Division A $ 15,200,000 $ 3,040,000 $ 668,800 9.00%

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 below: Division C $ 25,200,000 $ 5,040,000 $ 655,200 13.00% Sales Average operating assets Net operating income Minimum required rate of return Required: 1. Compute each division's margin, turnover, and return on investment (ROI). 2. Compute each division's residual income (loss). 3. Assume each division is presented with an investment opportunity yielding a 10% rate of return. a. If performance is being measured by ROI, which division or divisions will accept the opportunity? b. If performance is being measured by residual income, which division or divisions will accept the opportunity? Complete this question by entering your answers in the tabs below. Division A Division B Division C Required 1 Required 2 Required 3A Required 38 Compute each division's margin, turnover, and return on investment (ROI). Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Margin Division A $ 15,200,000 $ 3,040,000 $ 668,800 9.00% % % % Turnover Division B $35,200,000 $7,040,000 $ 563,200 9.50% ROI Required 1 % % Required 2 >
Transcribed Image Text:Selected sales and operating data for three divisions of different structural engineering firms are given below: Division C $ 25,200,000 $ 5,040,000 $ 655,200 13.00% Sales Average operating assets Net operating income Minimum required rate of return Required: 1. Compute each division's margin, turnover, and return on investment (ROI). 2. Compute each division's residual income (loss). 3. Assume each division is presented with an investment opportunity yielding a 10% rate of return. a. If performance is being measured by ROI, which division or divisions will accept the opportunity? b. If performance is being measured by residual income, which division or divisions will accept the opportunity? Complete this question by entering your answers in the tabs below. Division A Division B Division C Required 1 Required 2 Required 3A Required 38 Compute each division's margin, turnover, and return on investment (ROI). Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Margin Division A $ 15,200,000 $ 3,040,000 $ 668,800 9.00% % % % Turnover Division B $35,200,000 $7,040,000 $ 563,200 9.50% ROI Required 1 % % Required 2 >
Required 1 Compute each division's residual income (loss). Note: Do not round intermediate calculations. Loss amounts should be indicated by a minus sign. Required 2 Required 3A Required 3B Residual income (loss) Show Transcribed Text Division A Division B Division C Show Transcribed Text Division A Division A Division B Division C Division B < Required 1 Required 1 Required 2 Required 3A Required 38 Assume each division is presented with an investment opportunity yielding a 10% rate of return. If performance is being measured by ROI, which division or divisions will accept or reject the opportunity? < Required 2 J Division C c < Required 3A Required 3A > Required 38 > c Required 1 Required 2 Required 3A Required 38 Assume each division is presented with an investment opportunity yielding a 10% rate of return. If performance is being measured by residual income, which division or divisions will accept or reject the opportunity? Required 38 >
Transcribed Image Text:Required 1 Compute each division's residual income (loss). Note: Do not round intermediate calculations. Loss amounts should be indicated by a minus sign. Required 2 Required 3A Required 3B Residual income (loss) Show Transcribed Text Division A Division B Division C Show Transcribed Text Division A Division A Division B Division C Division B < Required 1 Required 1 Required 2 Required 3A Required 38 Assume each division is presented with an investment opportunity yielding a 10% rate of return. If performance is being measured by ROI, which division or divisions will accept or reject the opportunity? < Required 2 J Division C c < Required 3A Required 3A > Required 38 > c Required 1 Required 2 Required 3A Required 38 Assume each division is presented with an investment opportunity yielding a 10% rate of return. If performance is being measured by residual income, which division or divisions will accept or reject the opportunity? Required 38 >
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