BeanTown owns and operates coffee shops in three large cities on the West Coast: Seattle, San Francisco, and Los Angeles. The three geographic areas are considered separate divisions. Each division owns the buildings of the coffee shops, which are considered long-term assets. The buildings are all 10 years old and have a total useful life of 20 years. Current assets are considered negligible in each division. Division managers at BeanTown are evaluated on the basis of ROI, which traditionally has been calculated as the ratio of operating income divided by the net book value of assets, measured at historical costs. The following information refers to the three divisions at the end of 2020: (Click the icon to view the data.) i (Click the icon to view the additional information.) Read the requirements. ..... Requirement 1. Explain how the numerator of the ROI measure, operating income, has to be adjusted to reflect current costs and do the calculation for the three divisions. Select the appropriate formula labels as a way of explaining how the numerator of the Rol measure operating income) has to be adjusted to reflect current costs and then complete the computations to determine the adjusted operating income amount for the three divisions. Adjusted operating income + Operating income (originally reported) $ 602,000 = Seattle + San Francisco $ 699,200 + IIILID Los Angeles $ 627,500 + + Seattle San Francisco Los Angeles Revenues $ 1,505,000 $ 1,748,000 $ 1,255,000 Operating costs (excluding building depreciation) 798,000 105,000 900,800 148,000 548,500 79,000 Building depreciation expense $ 602,000 $ 699,200 $ 627,500 Operating income Gross book value of long-term assets $ 2,100,000 $ 1,050,000 2,960,000 $ 1,480,000 1,580,000 790,000 Accumulated depreciation 57.33% ROI based on historical costs 47.24% 79.43% Senior management at BeanTown wants to switch to calculating Rol based on current costs. Costs of new constructions have exploded all along the West Cost and would now be twice as expensive as they were 10 years ago. In other words, the construction cost index has doubled in all three cities. (The useful life of new constructions is still 20 years)