Question

In: Accounting

Selected sales and operating data for three divisions of different structural engineering firms are given as...

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

Division A Division B Division C
Sales $ 12,440,000 $ 35,550,000 $ 25,550,000
Average operating assets $ 3,110,000 $ 7,110,000 $ 5,110,000
Net operating income $ 547,360 $ 639,900 $ 740,950
Minimum required rate of return 10.00 % 10.50 % 14.50 %

Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Margin Turnover ROI
Division A % %
Division B % %
Division C % %

Compute the residual income (loss) for each division. (Do not round intermediate calculations. Loss amounts should be indicated by a minus sign.)

Division A Division B Division C
Residual income (loss)

Assume that each division is presented with an investment opportunity that would yield a 11% rate of return. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity?

Division A
Division B
Division C   

Assume that each division is presented with an investment opportunity that would yield a 11% rate of return. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity?

Division A
Division B
Division C
  

Solutions

Expert Solution


Related Solutions

Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 12,000,000 $ 14,000,000 $ 25,000,000 Average operating assets $ 3,000,000 $ 7,000,000 $ 5,000,000 Net operating income $ 600,000 $ 560,000 $ 800,000 Minimum required rate of return 14 % 10 % 16 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 12,600,000 $ 35,750,000 $ 20,600,000 Average operating assets $ 3,150,000 $ 7,150,000 $ 5,150,000 Net operating income $ 516,600 $ 572,000 $ 597,400 Minimum required rate of return 9.00 % 9.50 % 11.60 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 5,100,000 $ 9,100,000 $ 8,200,000 Average operating assets $ 1,020,000 $ 2,275,000 $ 1,640,000 Net operating income $ 214,200 $ 746,200 $ 118,900 Minimum required rate of return 17.00 % 32.80 % 14.00 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 12,280,000 $ 35,350,000 $ 20,280,000 Average operating assets $ 3,070,000 $ 7,070,000 $ 5,070,000 Net operating income $ 601,720 $ 600,950 $ 567,840 Minimum required rate of return 10.00 % 10.50 % 11.20 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 12,360,000 $ 28,360,000 $ 25,450,000 Average operating assets $ 3,090,000 $ 7,090,000 $ 5,090,000 Net operating income $ 494,400 $ 453,760 $ 636,250 Minimum required rate of return 7.00 % 7.50 % 12.50 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 12,120,000 $ 28,120,000 $ 20,120,000 Average operating assets $ 3,030,000 $ 7,030,000 $ 5,030,000 Net operating income $ 496,920 $ 449,920 $ 503,000 Minimum required rate of return 7.00 % 7.50 % 10.00 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 16,000,000 $ 36,000,000 $ 20,800,000 Average operating assets $ 3,200,000 $ 7,200,000 $ 5,200,000 Net operating income $ 752,000 $ 576,000 $ 540,800 Minimum required rate of return 9.00 % 9.50 % 10.40 % Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for...
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C   Sales $ 5,600,000 $ 9,600,000 $ 8,700,000   Average operating assets $ 1,120,000 $ 3,200,000 $ 1,740,000   Net operating income $ 263,200 $ 835,200 $ 169,650   Minimum required rate of return 16.00 % 26.10 % 13.00 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover....
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 6,900,000 $ 10,900,000 $ 10,000,000 Average operating assets $ 1,725,000 $ 5,450,000 $ 2,500,000 Net operating income $ 414,000 $ 1,090,000 $ 325,000 Minimum required rate of return 19.00 % 20.00 % 16.00 %      Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and...
Selected sales and operating data for three divisions of different structural engineering firms are given as...
Selected sales and operating data for three divisions of different structural engineering firms are given as follows:                                                                         Division A                  Division B                  Division C Sales                                                              $12,000,000              $14,000,000              $25,000,000 Average operating assets                           $3,000,000                $7,000,000                $5,000,000 Net operating income                                  $600,000                   $560,000                   $800,000 Minimum required rate of return                14%                            10%                            16% Required: 1.         Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.             ANSWER:     Division A margin             =          __________                                    ...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT