Blackwood Industries manufactures die machinery. To meet its expansion needs, it recently $(2020)$ acquired one of its suppliers, Delta Steel. To maintain Delta's separate identity, Blackwood reports Delta's operations as an investment center. Blackwood monitors all of its investment centers on the basis of return on investment $($ROI$).$ Management bonuses are based on ROI, and all investment centers are expected to earn a minimum $10\%$ return before income taxes.

Delta's ROI has ranged from $14\%$ to $18\%$ since $2020.$ The company recently had the opportunity for a new investment that would have yielded a $13\%$ ROI. However, division management decided against the investment because it believed that the investment would decrease the division's overall ROI.

The $2022$ operating statement for Delta follows. The division's operating assets were $$38,400,000$ at the end of $2022,$ a $1\%$ increase over the $2021$ year$-$end balance.

DELTA DIVISION

Operating Statement

For Year Ended December $31,2022(000$s omitted$)$

Sales $ $113,500$

Cost of goods sold $73,775$

Gross profit $39,725$

Operating expenses:

Administration $ $16,808$

Selling $16,93233,740$

Operating income $ $5,985$

Required:

$1.$ Calculate the following performance measures for $2022$ for the Delta division:

a$.$ Return on average investment in operating assets. $($Round your final answer to $2$ decimal places.$)$

b$.$ Residual income $($RI$)$ calculated on the basis of average operating assets.