Computing and Interpreting Return on Investment (ROI) [LO1]

Selected operating data on the two divisions of York Company are given below:

Division Eastern Western Sales . . . . . . . . . . . . . . . . . . . . . . $1,000,000 $1,750,000 Average operating assets . . . . . . . $500,000 $500,000 Net operating income. . . . . . . . . . . $90,000 $105,000 Property, plant, and equipment . . . $250,000 $200,000 Required:

1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover.

2. Which divisional manager seems to be doing the better job? Why?