Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Division Osaka Yokohama

Sales $ 10,400,000 $ 34,000,000

Net operating income $ 520,000 $ 2,380,000

Average operating assets $ 2,600,000 $ 17,000,000

1) For each division, compute the return on investment (ROI) in terms of margin and turnover. Osaka Yokohama

RO1 ?% ?%

2) Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 12%. Compute the residual income for each division:

Osaka Yokohama

Average operating assets ? ?

net opearting income ? ?

minimum required return on average assets ? ?

residual income ? ?

3)Is Yokohamas greater amount of residual income an indication that it is better managed?

Y or N ?