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FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division:
Fruit Division Flower Division
Sales revenue
Cost of goods sold and operating expenses
2$
1,740,000
2,610,000
1,957,500
652,500
1,392,000
Net operating income
$
348,000
Average invested assets
3,480,000
2,718,750
Orange has established a hurdle rate of 6 percent
Required:
1-a. Compute each division's return on investment (ROI) and residual income for last year.
1-b. Determine which manager seems to be performing better.
2. Suppose Orange is investing in new technology that will increase each division's operating Income by $131,000. The total
investment required is $2,200,000, which will be split evenly between the two divisions Calculate the ROI and residual Income for
each division after the investment is made.
3. Determine whether both managers will support the investment.
Complete this question by entering your answers in the tabs below.
Reg 1A
Reg 1B
Reg 2
Reg 3
Compute each division's return on investment (ROI) and residual income for last year. (Enter your ROI answers as a
percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))
Fruit Division
Flower Division
ROI
Residual Income (Loss)
Reg 18 >
( Prey
5 of 12
Next >
here to search
f2
f3
2
3"
Transcribed Image Text:Saved
Orange Corp. has two divisions: Fruit and Flower. The following information for the past year is available for each division:
Fruit Division Flower Division
Sales revenue
Cost of goods sold and operating expenses
2$
1,740,000
2,610,000
1,957,500
652,500
1,392,000
Net operating income
$
348,000
Average invested assets
3,480,000
2,718,750
Orange has established a hurdle rate of 6 percent
Required:
1-a. Compute each division's return on investment (ROI) and residual income for last year.
1-b. Determine which manager seems to be performing better.
2. Suppose Orange is investing in new technology that will increase each division's operating Income by $131,000. The total
investment required is $2,200,000, which will be split evenly between the two divisions Calculate the ROI and residual Income for
each division after the investment is made.
3. Determine whether both managers will support the investment.
Complete this question by entering your answers in the tabs below.
Reg 1A
Reg 1B
Reg 2
Reg 3
Compute each division's return on investment (ROI) and residual income for last year. (Enter your ROI answers as a
percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.))
Fruit Division
Flower Division
ROI
Residual Income (Loss)
Reg 18 >
( Prey
5 of 12
Next >
here to search
f2
f3
2
3
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