Reiman Industries, a merchandising firm, provides the following information regarding one of its divisions

The firm requires a 10% rate of return from its divisions.

Required:
Suppose sales for 2009 are expected to be $3,000,000, and the average asset base was projected at $2,275,000. Calculate the firm€™s return on investment and residual income for2009.

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Year 2007 Year 2008 $2,400,000 $2,700,000 Cost of goods sold 1,800,000 2,010,000 690,000 510,000 120,000 180,000 Average assets $2,100,000 $2,225,000 Sales Gross margin Selling expenses Profit before tax 480,000 5