Hinsdale Company has the following data for this year:
Please answer the following problem.
Bottling Division Mixing Division
Average operating assets $320,000 $ 800,000
Contribution margin 160,000 500,000
Operating income 80,000 120,000
Sales 400,000 1,200,000
Weighted-average cost of capital 18% 18%
Hinsdale Company has a target ROI of 18 percent.
Required: find out the following amounts for each division:
a. Return on sales ratio
b. Operating investment turnover
d. Residual income