1. Jordan Company calculated its return on investment as 10 percent. Sales are now $390,000, and the amount of total operating assets is $410,000.

Required

1. If expenses are reduced by $36,900 and sales remain unchanged, what return on investment will result? (Round your answer to 2 decimal places. (i.e., .2345 should be entered as 23.45).)

2. If both sales and expenses cannot be changed, what change in the amount of operating assets is required to achieve the same result? (Do not round intermediate calculations. Round your answer to the nearest whole dollar amount.)

a.	Return on investment		%
b.	Operating assets must		by

2. Thornton Corporation has a desired rate of return of 6 percent. William Tobin is in charge of one of Thorntons three investment centers. His center controlled operating assets of $2,450,000 that were used to earn $267,000 of operating income.

Required

Compute Mr. Tobins residual income.

RESIDUAL INCOME ______

3. Gibson Cough Drops operates two divisions. The following information pertains to each division for 2018:

	Division A				Division B
Sales	$	204,000			$	78,000
Operating income	$	15,200			$	9,800
Average operating assets	$	62,000			$	42,000
Company's desired rate of return		13	%			13	%

Required

1. Compute each divisions residual income.

2. Which division increased the companys profitability more?

		Residual Income
a.	Division A
	Division B
b.	The division that increased the company's profitability more is