Major Manufacturing \(\mathrm{Co}\). is a producer and distributor of a wide variety of consumer products. Major is a decentralized corporation, and evaluates the performance of its segments using return on investment as a performance measure. Invested capital is defined as the total assets available to a division valued at the assets' historical costs. Major is currently attempting to evaluate the performance of the Food Products Division over the past three years, and the Controller has prepared the following summary of operating results.

{Required:}
Using the data provided,

(a) Compute ROI for each year for the Food Products Division if:
(1) Assets are valued at gross book value;
(2) Assets are valued at net book value.

(b) What criticism of these methods can you offer the management of Major Manufacturing?

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Segment margin......... Current assets... Equipment and buildings......... Less: Accumulated depreciation Net book value......... Land...... Total assets.. Food Products Division (000 omitted) 20X1 20X2 20X3 $ 200 $ 190 $ 180 40 40 40 1,000 1,000 1,000 (300) (400) (500) 700 600 500 960 960 960 $1,700 $1,600 $1,500