Selected sales and operating data for three divisions of different structural engineering firms are given as follows:Division A$ 5,000,000$ 1,000,00024Division C$ 8,100, 000$ 1,620, 000$4Division B$ 9,000, 000$ 4,500,000$4SalesAverage operating assetsNet operating incomeMinimum required rate of return205,000729, 000109, 35016.00%16.20%13.00%Required:1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.2. Compute the residual income (loss) for each division.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?b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity?Complete this question by entering your answers in the tabs below.Req 1Req 2Req 3Adeg 3BAssume that each division is presented with an investment opportunity that would yield a 16% rate of return. If performanceis being measured by residual income, which division or divisions will probably accept or reject the opportunity?Division ADivision BDivision C

Return on investment represents the return the company gets in return of the money invested.

Answered: Selected sales and operating data for…

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.5.3P

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(J) Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division ADivision BDivision CSales$ 12,120,000$ 28,120,000$ 20,120,000Average operating assets$ 3,030,000$ 7,030,000$ 5,030,000Net operating income$ 496,920$ 449,920$ 503,000Minimum required rate of return7.00%7.50%10.00%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 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity
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Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C $ 5,000, 000 $ 1,000,000 %$4 Sales Average operating assets Net operating income Minimum required rate of return $ 9,000,000 $ 4,500,000 2$ $ 8, 100, 000 $ 1,620, 000 109, 350 13.00% 205,000 $4 729,000 16.20% 16.00% Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 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? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? es Complete this question by entering your answers in the tabs below. Req 1 Req Req…
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