Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Division Osaka $ 10,100,000 $ 808,000 $ 2,525,000 Yokohama $ 31,000,000 $ 3,100,000 $ 15,500,000 Required: 1. For each division, compute the return on investment (ROI). 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions
follow:
Sales
Net operating income
Average operating assets
Division
Osaka
$ 10,100,000
$ 808,000
$ 2,525,000
Yokohama
$ 31,000,000
$ 3,100,000
$ 15,500,000
Required:
1. For each division, compute the return on investment (ROI).
2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any
division is 17%. Compute the residual income for each division.
Transcribed Image Text:Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Division Osaka $ 10,100,000 $ 808,000 $ 2,525,000 Yokohama $ 31,000,000 $ 3,100,000 $ 15,500,000 Required: 1. For each division, compute the return on investment (ROI). 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division.
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