Division A and Division B are two divisions of Steel Ltd that operate in similar markets.

The divisions are treated as investment centres, and every month, each division

prepares an operating statement.

The operating statements for these two divisions for October $2023$ are as follows: Division A Division B

Rands Rands

Sales revenue $750000750000$

Less: Variable costs $(145000)(112000)$

Contribution $605000638000$

Less: Controllable fixed costs $($includes depreciation of

divisional assets$)$

$(190000)(84000)$

Controllable income $415000554000$

Less: Apportioned central costs $(247000)(357000)$

Profit before tax $168000197000$

Total divisional net assets R$2060000$ R$1260000$

The company currently has a target return on capital of $9\mathrm{.}5\%$ per annum. At present,

the performance of each division and the divisional management is assessed primarily

on the basis of return on investment $($ROI$).$

REQUIRED:

$4\mathrm{.}1.$ Calculate the return on investment $($ROI$)$ of Division A for October $2023.$

$4\mathrm{.}2.$ Calculate the annualised residual income $($RI$)$ of Division A and Division B for

October $2023.$ Briefly explain the conclusion that can be derived from this

evaluation of the divisions$$ performance.