Question
Batman Abstract Company has three divisions that operate autonomously. Their results for the current year were as follows: Riddler Joker Penguin Sales $5,000,000 $7,000,000 $10,000,000
Batman Abstract Company has three divisions that operate autonomously. Their results for the current year were as follows:
|
| Riddler | Joker | Penguin |
| Sales | $5,000,000 | $7,000,000 | $10,000,000 |
| Contribution margin | 1,440,000 | 1,700,000 | 3,500,000 |
| Operating income | 1,000,000 | 1,750,000 | 2,520,000 |
| Investment base | 9,000,000 | 10,000,000 | 14,000,000 |
The company's desired rate of return is 20%.
a. Compute each division's ROI.
b. Compute each division's residual income.
c. Rank each division by ROI
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Financial Accounting Tools For Business Decision Making
Authors: Paul D. Kimmel
4th Canadian Edition
0470155353, 978-0470155356
