Calculation of return on investment and residual income

Investment center analysis; ROI and residual income                      

Milano Corporation has three operating divisons and requires a 12% return on all investments.  Selected information is presented here-

                                                 Divison A       Division B        Division C

Revenues                                   $500,000                 

Operating Income                         $60,000                             $80,000

Operating Assets                         $250,000        $600,000      

Margin                                                                                    12%

Turnover                                                             1 turn           2 turns

ROI                 

Residual Income                                                                      $20,000

Required:

a.  Calculate the missing amounts for each division

b.  Comment on the relative performance of each division

c.  Provide an example to show how residual income improves decision making at the divisional level