One division of a company has reported the following operating results for the year just ended: Sales................................................................$600,000

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One division of a company has reported the following operating results for the year just ended:

Sales................................................................$600,000
Operating income..............................................72,000
Average operating assets...............................300,000


Required:

1. Compute the margin percentage, turnover, and ROI for this division.

2. If management sets a minimum required rate of return on average operating assets of 20%, what is the RI for this division for the year?

3. Explain the meaning of RI, and identify one strength and one weakness of measuring performance using RI.

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Related Book For  book-img-for-question

Introduction to Managerial Accounting

ISBN: 978-1259105708

5th Canadian edition

Authors: Peter C. Brewer, Ray H. Garrison, Eric Noreen, Suresh Kalagnanam, Ganesh Vaidyanathan

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