Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C $ 12,480,000 $ 3,120,000 $ 561,600 $ 28,480,000 $ 7,120,000 $ 512,640 8.5e% $ 20,480,000 $ 5,120,000 $ 532,480 Sales Average operating assets Net operating income Minimum required rate of return 8.00% 10.40% 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 9% 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 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 < Req 1 Req 2 > Reg 1 Req 2 Req 3A Req 3B Compute the residual Income (loss) for each division. (Do not round Intermediate calculations. Loss amounts should be Indicated by a minus sign.) Division A Division B Division C Residual income (loss) Req 1 Reg 2 Req 2 Req 3A Req 3B Assume that each division is presented with an investment opportunity that would yleld a 9% rate of return. If performance is being measured by ROI, which division or divlisions will probably accept or reject the opportunity? Division A Division B Division C Req 1 Req 2 Req 3A Req 3B Assume that each division is presented with an investment opportunity that would yield a 9% rate of return. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A Division B Division C

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
Division A
$ 12,480,000
$ 3,120,000
$ 561,600
8.00%
Division B
Division C
Sales
Average operating assets
Net operating income
Minimum required rate of return
$ 28,480,000
$ 7,120,000
$ 512,640
$ 20,480, 000
$ 5,120,000
$ 532,480
10.40%
8.50%
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 9% 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
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
%
%
< Req 1
Req 2 >
Reg 1
Req 2
Req 3A
Req 3B
Compute the residual Income (loss) for each division. (Do not round intermediate calculatlons. Loss amounts should be
Indicated by a minus slgn.)
Division A
Division B
Division C
Residual income (loss)
Req 1
Req 2
Req 3A
Req 3B
Assume that each division is presented with an investment opportunity that would yield a 9% rate of return. If performance is
being measured by ROI, which division or divlisions will probably accept or reject the opportunity?
Division A
Division B
Division C
Req 1
Req 2
Req 3A
Req 3B
Assume that each division is presented with an investment opportunity that would yield a 9% rate of return. If performance is
being measured by residual income, which division or divisions will probably accept or reject the opportunity?
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 A $ 12,480,000 $ 3,120,000 $ 561,600 8.00% Division B Division C Sales Average operating assets Net operating income Minimum required rate of return $ 28,480,000 $ 7,120,000 $ 512,640 $ 20,480, 000 $ 5,120,000 $ 532,480 10.40% 8.50% 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 9% 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 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 % % < Req 1 Req 2 > Reg 1 Req 2 Req 3A Req 3B Compute the residual Income (loss) for each division. (Do not round intermediate calculatlons. Loss amounts should be Indicated by a minus slgn.) Division A Division B Division C Residual income (loss) Req 1 Req 2 Req 3A Req 3B Assume that each division is presented with an investment opportunity that would yield a 9% rate of return. If performance is being measured by ROI, which division or divlisions will probably accept or reject the opportunity? Division A Division B Division C Req 1 Req 2 Req 3A Req 3B Assume that each division is presented with an investment opportunity that would yield a 9% rate of return. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A Division B Division C
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