2 Jimbob Co. has four operating divisions with the following information for the most recent fiscal...

Transcribed Image Text:

2 Jimbob Co. has four operating divisions with the following information for the most recent fiscal year. Jimbob Co. Division Sales Net $ A B C D $12,000,000 14,000,000 25,000,000 10,000,000 600,000 560,000 800,000 720,000 operating income Average $3,000,000 7,000,000 5,000,000 6,000,000 operating assets The minimum rate of return set by company management is 15%. Required: a. What is the return on investment for each division? b. If Division B was able to reduce its operating expenses by $70,000, what would be its new return on investment? c. What is the residual income for each division? d. If the divisions were each offered an opportunity to add an investment that would result in a 17% ROI, which division would be less likely to lows 2 Jimbob Co. has four operating divisions with the following information for the most recent fiscal year. Jimbob Co. Division Sales Net $ A B C D $12,000,000 14,000,000 25,000,000 10,000,000 600,000 560,000 800,000 720,000 operating income Average $3,000,000 7,000,000 5,000,000 6,000,000 operating assets The minimum rate of return set by company management is 15%. Required: a. What is the return on investment for each division? b. If Division B was able to reduce its operating expenses by $70,000, what would be its new return on investment? c. What is the residual income for each division? d. If the divisions were each offered an opportunity to add an investment that would result in a 17% ROI, which division would be less likely to lows