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1 Performance Mealurement 2 Autumn Maxwell manages the West Coast division (an investment center) of Vroom Enterprises, 3 which has a required return of 12%
1 Performance Mealurement 2 Autumn Maxwell manages the West Coast division (an investment center) of Vroom Enterprises, 3 which has a required return of 12% on the average assets invested in any division. 4 5 2019 did not go well for Ms. Maxwell and the West Coast division. 6 The division reported a return on investment (ROI) of just 5%, and negative residual income. 7 For 2019, the West Coast division reported revenue of $40 million and expenses of $36 million. 8 After seeing her annual review, Autumn knew that she must take action in 2020 in order to save her job. 9 10 She reduced the average assets invested in the division by $10 million. 11 Additionally, she decreased expenses by $3 million and increased revenue. 12 These steps allowed the West Coast division to increase its residual income by $6.3 million compared to the prior year. 13 14 What amount of revenue did the West Coast Division report for 2020? 15 16 17 18 19
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