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The following information is available about the status and operations for Division B of Bentley Company, which has a minimum required ROI of 20%. Answer each item independently of the others.

Results	Division B
Divisional investment	$1,500,000
Divisional profit	$550,000
Divisional sales	$3,600,000

Requirements:

Compute the residual income for Division B
Division B could increase its profit by $25,000 by increasing its investment by $100,000. Compute its new residual income
Division B could increase its profit margin ratio by one percentage point (for example: from 13% to 14%), without increasing total sales or investment. Compute its new residual income.
Division B could reduce its investment so that its asset turnover increased by one time, while holding total sales and profit constant. Compute its new residual income.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M9954871

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