The following information is available for the three divisions of the Slick Company:

The required rate of return for the company is 15 percent.

Required:

a. Determine the return on investment for each division.

b. Determine the residual income for each division.

c. Rank the three divisions assuming they are considered profit centers.

d. Rank the three divisions assuming they are considered investment centers and performance is evaluated based on return on investment.

e. Rank the three divisions assuming they are considered investment centers and performance is evaluated based on residual income.

f. Why do some of the rankings for parts

c, d, and e differ?

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Amount invested in each division: Division 1 Division 2 $1,155,000 $3,988,000 Division 3 $3,080,000 Segment margin of each division: Division 1 Division 2 Division 3 The required rate of return for the company is 15 percent. $196.350 $634,092 $492,800