Question
Accounting records from Division A, Alpha Manufacturing Company indicate the following: Divisional Sales $1,500,000 Average Investment $1,000,000 Divisional operating income $169,500 Minimum Rate of Return
Accounting records from Division A, Alpha Manufacturing Company indicate the following: Divisional Sales $1,500,000 Average Investment $1,000,000 Divisional operating income $169,500 Minimum Rate of Return 14% Required: 1. Compute the return on sales (ROS) for Division A. (Round answer to one decimal point.) 2. Compute the asset turnover (AT) for Division A. 3. Compute return on investment (ROI) for this division, using answers to parts (1) and (2). (Round answer to two decimal points.) 4. Compute residual income (RI) for Division A. 5. Describe how Alpha Manufacturing would determine whether or not to invest in any particular project in the future.
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