Question
Division A Division B Division C Sales $12,000,000 $14,000,000 $25,000,000 Average Operating Assets $3,000,000 $7,000,000 $5,000,000 Net Operating Income $600,000 $560,000 $800,000 Minimum Required Rate
| Division A | Division B | Division C | |
| Sales | $12,000,000 | $14,000,000 | $25,000,000 |
| Average Operating Assets | $3,000,000 | $7,000,000 | $5,000,000 |
| Net Operating Income | $600,000 | $560,000 | $800,000 |
| Minimum Required Rate of Return | 14% | 10% | 16% |
1a. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return, if performance is being measured by residual income, which division or divisions will probably accept the opportunity?Explain.
1b. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return, if performance is being measured by ROI, which division or divisions will probably accept the opportunity? Explain.
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Managerial Accounting
Authors: James Jiambalvo
7th Edition
1119577721, 978-1119577720
