Determining Missing Items from Computations Data for the North, South, East and West divisions of Free Bird Company are as follows: Sales Income from Operations Invested Assets Return on Investment Profit Margin Investment Turnover North $860,000 (a) (b) 17.5% 7.0% (c) South (d) $51,300 (e) (f) 4.5% 3.8 East $1,020,000 (g) $680,000 15.0% (h) (i) West $1,120,000 $89,600 $560,000 (j) (k) (l) a. Determine the missing items, identifying each by the letters (a) through (l). If required, round percents and investment turnover to one decimal place. a. $ b. $ c. d. $ e. $ f. % g. $ h. % i. j. % k. % l. b. Determine the residual income for each division, assuming that the minimum acceptable rate of return established by management is 12%. Division Residual Income North Division $ South Division $ East Division $ West Division $ c. Which division is the most profitable in terms of (1) return on investment and (2) residual income? Most Profitable 1. Return on Investment 2. Residual Income

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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Determining Missing Items from Computations

Data for the North, South, East and West divisions of Free Bird Company are as follows:

Sales

Income from Operations

Invested Assets

Return on Investment

Profit Margin

Investment Turnover

North

$860,000

(a)

(b)

17.5%

7.0%

(c)

South

(d)

$51,300

(e)

(f)

4.5%

3.8

East

$1,020,000

(g)

$680,000

15.0%

(h)

(i)

West

$1,120,000

$89,600

$560,000

(j)

(k)

(l)

a. Determine the missing items, identifying each by the letters (a) through (l). If required, round percents and investment turnover to one decimal place.


a.	$
b.	$
c.
d.	$
e.	$
f.		%
g.	$
h.		%
i.
j.		%
k.		%
l.

b. Determine the residual income for each division, assuming that the minimum acceptable rate of return established by management is 12%.

Division	Residual Income
North Division	$
South Division	$
East Division	$
West Division	$

c. Which division is the most profitable in terms of (1) return on investment and (2) residual income?

	Most Profitable
1. Return on Investment
2. Residual Income

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