Lauderdale Corporation is organized in three geographical divisions (regions) with managers responsible for revenues, costs, and assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance. Corporate overhead (all fixed) is allocated to the regions based on regional gross margin (regional revenue minus regional cost of sales).The following information is from Lauderdale's first year of operations: Region IRegion IIRegion IIITotal CorporationRevenues$ 1,206,000$ 1,656,000$ 2,256,000$ 5,118,000Cost of sales453,000813,0001,143,0002,409,000Selling, General and Administrative (all fixed)429,000639,000859,0001,927,000Corporate overhead 444,000Information on the division assets in the three regions of Lauderdale Corporation follows:Region I$ 706,000Region II636,000Region III1,296,500Required:Compute the division ROI for each of the three regions.How have these regions performed?

Divisional ROI is a measure of the profitability and efficiency of a certain division within an…

Answered: Compute the division ROI for each of…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Lauderdale Corporation is organized in three geographical divisions (regions) with managers responsible for revenues, costs, and assets in their respective regions. The firm is highly decentralized and managers are evaluated solely on divisional performance. Corporate overhead (all fixed) is allocated to the regions based on regional gross margin (regional revenue minus regional cost of sales).

The following information is from Lauderdale's first year of operations:

	Region I	Region II	Region III	Total Corporation
Revenues	$ 1,206,000	$ 1,656,000	$ 2,256,000	$ 5,118,000
Cost of sales	453,000	813,000	1,143,000	2,409,000
Selling, General and Administrative (all fixed)	429,000	639,000	859,000	1,927,000
Corporate overhead				444,000

Information on the division assets in the three regions of Lauderdale Corporation follows:

Region I	$ 706,000
Region II	636,000
Region III	1,296,500

Required:

Compute the division ROI for each of the three regions.
How have these regions performed?

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