For performance evaluation, Victory Inc. considers each of its three vacation resorts separately. Each is considered an Investment Center. Fun Resort had Revenue of $1,200,000 and Variable Costs of $310,000 and Fixed Costs of $650,000 so the subunits Operating Income was $240,000. Pamper Resort had Revenue of $3,185,000 and Variable Costs of $995,000 and Fixed Costs of $1,680,000 so the subunits Operating Income was $510,000. Relax Resort had Revenue of $1,400,000 and Variable Costs of $375,000 and Fixed Costs of $725,000 so the subunits Operating Income was $300,000. Total assets for Fun Resort were $1,100,000 while total assets for Pamper Resort were $3,300,000 and total assets for Relax Resort were $2,200,000. Victory Inc. expects each of its investment centers to generate a minimum required rate of return of 9%.

REQUIRED:

For each subunit, calculate Return on Investment, DuPont components of Return on Investment, and Residual Income.

Then provide a final performance ranking of the subunits by first, second, and third place and explain why you ranked them in that way.