(Answered) Question - ferris ltd of australia has two divisions one in

Accounting

Question - Ferris Ltd. of Australia has two divisions, one in Perth and one in Darwin. Selected date on the two divisions follow:

	Division
	Perth	Darwin
Sales	$9,510,000	$23,400,000
Operating income	665,700	2,106,000
Average operating assets	3,170,000	11,700,000

Required:

1. Compute the ROI for each division.

2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 16%. Compute the residual income for each division.

3. Is the Darwin Division's greater residual income en indication that it is better managed?

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