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 $ 9,800,000 $ 28,000,000 Net operating income $ 588,000 $ 2,240,000 Average operating assets $ 2,450,000 $ 14,000,000 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 14%. Compute the residual income for each division. 3. Is Yokohamas greater amount of residual income an indication that it is better managed?

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

	Osaka		Yokohama
ROI		%		%

Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 14%. Compute the residual income for each division.

	Osaka	Yokohama
Residual income

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

	Yes No