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Cullumber Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisional managers are to decide which performance
Cullumber Corporation recently announced a bonus plan to reward the manager of its most profitable division. The three divisional managers are to decide which performance measure will be used to evaluate profitability. Cullumber Corporation requires a 10% minimum return on investment. The following information is available for the year just ended.
Division | Gross Book Value of Assets | Divisional Operating Income | |||
Ashton | $800,000 | $94,960 | |||
Drye | 752,800 | 91,360 | |||
Poole | 440,000 | 57,800 |
(a) Calculate return on investment. (Round R01 to 2 decimal places, e.g. 5.12%.) Return on Investment Ashton Drye Poole Which division performed the best? (b) Calculate residual income.(If the amount is negative then enter with a negative sign preceding the number, e.g.-5,125 or parentheses, e.g (5,125). Residual Income Ashton $ Drye Poole$ Which division performed the best
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