ute ROI for Division B. b. Compute residual income for Division A. c. Division B could increase its profit by $80,000 by increasing its investment by $300,000. Compute its total residual income. d. Division A could increase its return on sales by one percentage point, while keeping the same total sales. Compute its ROI. e. Division A could increase its sales so that its asset turnover increased by one time, while holding total assets constant. Compute its ROI.
ute ROI for Division B. b. Compute residual income for Division A. c. Division B could increase its profit by $80,000 by increasing its investment by $300,000. Compute its total residual income. d. Division A could increase its return on sales by one percentage point, while keeping the same total sales. Compute its ROI. e. Division A could increase its sales so that its asset turnover increased by one time, while holding total assets constant. Compute its ROI.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
a. Compute ROI for Division B.
b. Compute residual income for Division A.
c. Division B could increase its profit by $80,000 by increasing its investment by $300,000. Compute
its total residual income.
d. Division A could increase its return on sales by one percentage point, while keeping the same total
sales. Compute its ROI.
e. Division A could increase its sales so that its asset turnover increased by one time, while holding
total assets constant. Compute its ROI.
Transcribed Image Text:The following information is available about the status and operations of Stills Company, which has
a minimum required ROI of 20%. ANSWER EACH ITEM INDEPENDENTLY OF THE
OTHERS.
Division Division
B
A
Divisional investment $400,000 $1,250,000
Divisional profit
Divisional sales
$120,000 $ 580,000
$800,000 $2,600,000
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