E12–3 Time allowed: 20 minutes Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow (in millions of yen, denoted by ¥):

Requried 1 For each division, compute the return on investment (ROI) in terms of margin and turnover. Where necessary, carry computations to two decimal places.
2 Assume that the company evaluates performance by use of residual profit and that the minimum required return for any division is 15%. Compute the residual profit for each division.
3 Is Yokohama’s greater amount of residual profit an indication that it is better managed? Explain.

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Sales Net operating profit Average operating assets Osaka 3,000,000 210,000 1,000,000 Division Yokohama 9,000,000 720,000 4,000,000