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help please Briar Gate Farm, located in Longmont, Colorado operates three divisions - Cheese, Goats and Education Services. The cheese division produces and sells all
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Briar Gate Farm, located in Longmont, Colorado operates three divisions - Cheese, Goats and Education Services. The cheese division produces and sells all types of cheeses from Chevre to Emmental using milk from the farm's goats. The goat division breeds goats, keeping a few each year and selling the remainder to other goat milk producers and individuals looking for a goat for a pet or for show such as at county fairs and 4H. The education division provides training both in person, online, and across the country using its "cheese wagons" on cheese making. Division managers are evaluated based on the division's return on investment, and historically, the Cheese division has consistently outperformed the other two divisions. Goat division's senior management team has recently discovered that the Cheese Division manager has chosen not to invest in projects that would have been beneficial to the organization as a whole, and they are concerned that the current practice of evaluation the division managers' performance using return on investment may have contributed to these decisions. Therefore, the CEO, Kate Johnson and the senior management team are considering the use of residual income to evaluate the division managers' performance. The following data is taken from the most recent year of operations. Required: 1. Calculate the sales margin, capital asset turnover, return on investment, and residual income for each division. 2. Comment on the expected results of switching performance evaluation method to residual income. Should the switch be made? Why or why not? (Hint: think about how similar and different the divisions are in areas such as size, what they do, etc.) Step by Step Solution
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