Selected sales and operating data for three divisions of different structural engineering firms are given as follows:Division B$ 35,750,000$ 7,150,000$ 572,0009.50%Division C$ 20,600,000$ 5,150,000$ 597,40011.60%SalesAverage operating assetsNet operating incomeMinimum required rate of returnRequired:1. Compute the margin, turnover, and return on investment (ROI) for each division.2. Compute the residual income (loss) for each division.3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return.a. If performance is being measured by ROI, which division or divisions will obably accept the opportunity?b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity?Complete this question by entering your answers in the tabs below.Req 1Req 2Division ADivision BDivision CReq 3ACompute the margin, turnover, and return on investment (ROI) for each division.Note: Do not round intermediate calculations. Round your answers to 2 decimal places.Margin%do do doDivision A$ 12,600,000$ 3,150,000$ 516,6009.00%%TurnoverReq 3BROI< Req 1%%Req 2 >

Return on investment (ROI) is a performance statistic used to evaluate the efficiency or…

operating assets ting income required rate of return. Division A $ 12,600,000 $ 3,150,000 $ 516,600 9.00% Division B $ 35,750,000 $ 7,150,000 $ 572,000 9.50% Division C $ 20,600,000 $ 5,150,000 $ 597,400 11.60%

operating assets ting income required rate of return. Division A $ 12,600,000 $ 3,150,000 $ 516,600 9.00% Division B $ 35,750,000 $ 7,150,000 $ 572,000 9.50% Division C $ 20,600,000 $ 5,150,000 $ 597,400 11.60%

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 16E

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Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: At the beginning of last year, Elway had 28,300,000 in operating assets. At the end of the year, Elway had 23,700,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin and turnover ratios for last year. (Note: Round the answer for margin ratio to two decimal places.) 3. Compute ROI. (Note: Round answer to two decimal places.) 4. CONCEPTUAL CONNECTION Briefly explain the meaning of ROI. 5. CONCEPTUAL CONNECTION Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company).
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