After seeing the results of the segment analysis for the Nylon Fibers division, James Cameron wants all three divisions focusing on the correct avenues for improving division performance. Refer to Exhibit 10.4 and the related information on page 10-14 to answer the following questions.

Exhibit 10.4:

Required

a. Calculate the margin and asset turnover for Centex Yarns’ three divisions. Show that margin × asset turnover equals the return on investment for each division as reported in the text.

b. Compare the margin and asset turnover for the three divisions and make suggestions for increasing the return on investment of each division.

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A B D E Polyester Fibers Division Rope Division Fibers Division $ 10,600,000 $ 6,725,000 $ 8,650,000 $ 25,975,000 Nylon 1 Total 2 Revenue 3 Less variable expenses 4 Cost of goods sold Selling & administrative 6 Contribution margin 7 Less traceable fixed expenses Cost of goods sold 9 Selling & administrative 10 Segment margin 11 Common fixed expenses 5,543,000 2,368,000 4,414,000 12,325,000 1,334,000 649,000 890,000 2,873,000 3,723,000 3,708,000 3,346,000 10,777,000 8 1,685,000 1,382,000 2,208,000 5,275,000 236,000 174,000 273,000 683,000 $1,802,000 $ 2,152,000 $ 865,000 4,819,000 2,886,000 12 Net operating income 1,933,000 5.