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Auto Parts is a division of MPI International, located in Wadena, Saskatchewan. Auto Parts manufactures various automobile parts, such as bumpers, fenders, and axles, and
Auto Parts is a division of MPI International, located in Wadena, Saskatchewan. Auto Parts manufactures various automobile parts, such as bumpers, fenders, and axles, and sells them to major auto manufacturers. The division and its management are evaluated by senior corporate management on the basis of investment centre concepts. The following information pertains to operations of the Auto Parts division for 2021: $ Operating results: Total revenues Less: Direct variable costs Contribution margin Less: Direct fixed costs Segment margin Less: Allocated corporate costs Operating income 22,050, 000 9,078, 000 12, 972, 000 7, 805, 000 5, 167, 000 4,096, 000 1, 071, 000 $ Market Values December 31, December 31, 2020 2021 Current assets Fixed assets Accumulated depreciation Total operating assets Book Values December 31, December 31, 2021 2020 $ 1, 299, 000 $ 1, 866, 000 10, 650, 000 12, 129, 000 (1, 299, 000) (1, 816, 000) $ 10, 650, 000 $ 12, 179,000 $ 3, 115, 000 $ 3, 624, 000 $ 7, 535, 000 8,555, 000 $ 9,881, 000 $ 10, 922, 000 Liabilities Net assets Required: 1. Compute the margin, turnover, and ROI using operating income and the book value of average total operating assets. (Round "Margin" answer as a percentage rounded to 2 decimal places and other answers to 1 decimal place.) Margin % Turnover Return on investment % 2. Compute ROI using segment margin and average market value of operating assets. (Round your intermediate calculations to 2 decimal places. Enter your percentage answer rounded to 2 decimal place (i.e., 0.1234 should be entered as 12.34).) Return on investment % 3. Compute RI using operating income and the market value of average net assets. Assume that the required rate of return is 9%. Residual income
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