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%

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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Question

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
$ 572,000
9.50%
Division C
$ 20,600,000
$ 5,150,000
$ 597,400
11.60%
Sales
Average operating assets
Net operating income
Minimum required rate of return
Required:
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 1
Req 2
Division A
Division B
Division C
Req 3A
Compute 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 do
Division A
$ 12,600,000
$ 3,150,000
$ 516,600
9.00%
%
Turnover
Req 3B
ROI
< Req 1
%
%
Req 2 >

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