Evaluation of Decentralized Operations.

Sales: $760,000

Operating expenses: $700,000

Average operating assets: $400,000

Minimum required rate of return: 12%

Calculate: ABCs margin, turnover and ROI.

The company has the opportunity to invest in a project that would generate additional sales for $100,000, would increase operating expenses by $83,350 and would require an additional $150,000 investment. What would the company do if?

Managers performance was based on ROI? Explain.

Residual income was used? Calculate the Residual Income and explain.

All profitable investments were to be accepted? Explain.