Selected sales and operating data for three divisions of different structural engineering firms are given...

90.2K

Verified Solution

Question

Accounting

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

Division A Division B Division C
Sales $ 5,400,000 $ 9,400,000 $ 8,500,000
Average operating assets $ 1,080,000 $ 4,700,000 $ 1,700,000
Net operating income $ 243,000 $ 799,000 $ 148,750
Minimum required rate of return 14.00 % 17.00 % 11.00 %

Required:
1.

Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round your Turnover answers to 2 decimal places. Round your Margin and ROI percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Margin Turnover ROI
Division A % %
Division B % %
Division C % %

2.

Compute the residual income (loss) for each division. (Loss amounts should be indicated by a minus sign. Round your Required Rate of Return percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)

Division A Division B Division C
Average operating assets
required rate of return
required operating income
Actual operating income
Required operating income above
Residual income (loss)

3.

Assume that each division is presented with an investment opportunity that would yield a 16% rate of return.

a.

If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity?

Division A
Division B
Division C

b.

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
please show every single step on how do you fien the answer thank you

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students