Ferris Ltd. of Australia has two divisions, one in Perth and one in Darwin. Selected data on the two divisions follow:

	Division
	Perth		Darwin
Sales	$	9,480,000	$	23,200,000
Operating income		758,400		2,320,000
Average operating assets		3,160,000		11,600,000

Required:
1.	Compute the ROI for each division.

2.	Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division.

3.

Is the Darwin Divisions greater residual income an indication that it is better managed?

	Yes
	No