(Answered) Problem - selected sales and operating data for three

Accounting

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

	Division A	Division B	Division C
Sales	$5,400,000	$10,800,000	$8,100,000
Average operating assets	$1,410,000	$5,500,000	$2,000,000
Net operating income	$295,000	$899,000	$320,000
Minimum required rate of return	14%	17%	16%

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 for each division.

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