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Household Brands Inc. ( HBI ) manufactures household goods in the United States. The company made two acquisitions in previous years to diversify their product

Household Brands Inc. (HBI) manufactures household goods in the United States. The company made two acquisitions in previous years to diversify their product lines. In 2011, HBI acquired cosmetics and consumer electronics companies. HBI is now, in 2020, comprised of three divisions: cosmetics, household, and consumer electronics. The following information (in thousands of dollars) presents operating revenues, operating income, and invested assets of the company over the last three years:
Revenue Operating Income Assets
Cosmetics
2018 $ 24,500 $ 2,300 $ 10,000
201922,5001,90010,000
202019,6001,8009,500
Household
201817,4001,3007,500
201915,3001,1008,000
202012,5009006,500
Electronics
201813,5001,5004,500
20199,5001,1004,500
20208,7001,0504,300
Household Brands Total
201855,4005,10022,000
201947,3004,10022,500
202040,8003,75020,300
The current compensation package is an annual bonus award. The senior executives share in the bonus pool. The pool is calculated as 20% of the annual residual income of the company. The residual income is defined as operating income minus a cost of capital charge of 15% of invested assets. Round all calculations to two significant digits.
Return on sales in the household division in 2019 is (rounded):
A)6.34%
B)7.19%
C)7.88%
D)8.54%

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