2)

For its three investment centres, Stahl Company accumulates the following data: Centre I Sales Controllable margin Average operating assets $2,030,000 964,250 5,075,000 Centre II $3,947,000 2,264,360 8,087,000 Centre III $4,021,000 4,332,600 12,035,000 The centres expect the following changes in the next year: Centre I a 15% increase in sales; Centre II a $323,480 decrease in costs; and Centre III a $481,400 decrease in average operating assets. Calculate the expected return on investment for each centre. Assume Centre I has a contribution margin percentage of 75%. (Round ROI to 2 decimal places, e.g. 1.57%.) Centre I Centre II Centre III The expected return on investment 21.85 32 37.5 % % % Presented below is information related to the Southern Division of Lumber Ltd. Contribution margin $1,213,400 Controllable margin $896,962 Average operating assets $4,077,100 Minimum rate of return 18 % Calculate the Southern Division's return on investment and residual income. Return on investment % Residual income $