Sullivan Company has three divisions, Larry, Moe, and Curly. The company has a hurdle rate of 5 percent. Selected operating data of the three divisions follow:

Required

1. Compute the return on investment for each division.
2. Compute the residual income for each division.

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Sales Cost of goods sold Miscellaneous operating expenses Allocated corporate expenses Average invested assets Larry Moe $ 325,000 $220,000 216,000 123,000 45,000 36,000 Curly $ 298,000 202,000 39,000 18,000 1,300,000 12,000 16,500 970,000 1,025,000