ZIL Inc. operates two divisions, which are treated as investment centres. Data for each division for Year

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ZIL Inc. operates two divisions, which are treated as investment centres. Data for each division for Year 4 are as follows (in thousands):

Division A Division B Net income Total assets $ 50,000 $ 95,000 $300,000 $650,000


The company€™s required rate of return is 12%. The president wishes to evaluate the performance of these divisions and is not sure whether to use return on investment (ROI) or residual income (RI) as the performance measure. Which division performed better, based on the ROI and RI performance measures?

a. Division A because its ROI and RI are higher than those of Division B

b. Division A because its RI is higher than that of Division B

c. Division B because its ROI is higher than that of Division A

d. Division B because its ROI and RI are higher than those of Division A

e. None of the above

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Related Book For  book-img-for-question

Cost Management Measuring, Monitoring And Motivating Performance

ISBN: 1601

3rd Canadian Edition

Authors: Leslie G. Eldenburg, Susan K. Wolcott, Liang Hsuan Chen, Gail Cook

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