Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Training Services $530,000 $780,000 Athletic Wear $600,000 $106,000 $120,000 $ 21, 200 $156,000 $ 31,200 15% $ 30,000 13% Sales Average operating assets Operating income Minimum required rate of return Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. Fitness training Spa services Athletic wear ROI Residual income % % % 2. Compute the residual income for each division. 13% Fitness Training Spa Services Athletic Wear 3. Assume that each division is presented with an investment opportunit

Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Training Services $530,000 $780,000 Athletic Wear $600,000 $106,000 $120,000 $ 21, 200 $156,000 $ 31,200 15% $ 30,000 13% Sales Average operating assets Operating income Minimum required rate of return Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. Fitness training Spa services Athletic wear ROI Residual income % % % 2. Compute the residual income for each division. 13% Fitness Training Spa Services Athletic Wear 3. Assume that each division is presented with an investment opportunit

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter9: Responsibility Accounting And Decentralization

Section: Chapter Questions

Problem 8PB: The following revenue data were taken from the December 31, 2017, General Electric annual report...

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Question

3. Assume that each division is presented with an investment opportunity that would yield a rate of return of 21%.
a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity?
Fitness Training
Spa Services
Athletic Wear
b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity?
Fitness Training
Spa Services
Athletic Wear

Three divisions of Jameson Co. report the following sales and operating data:
Fitness
Spa
Training Services
$530,000 $780,000
Athletic
Wear
$600,000
$106,000
$ 21, 200
$156,000
$ 31,200
15%
$120,000
$ 30,000
13%
Sales
Average operating assets
Operating income
Minimum required rate of return
Required:
1. Compute the ROI for each division, using the formula stated in terms of margin and turnover.
Fitness training
Spa services
Athletic wear
ROI
Residual income
%
%
%
2. Compute the residual income for each division.
13%
Fitness Training Spa Services Athletic Wear
3. Assume that each division is presented with an investment opportunit

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