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	$	10,300,000	$	33,000,000
Net operating income	$	721,000	$	2,970,000
Average operating assets	$	2,575,000	$	16,500,000

1.	For each division, compute the return on investment (ROI) in terms of margin and turnover. (Do not round intermediate calculations. Enter your answers as a percent (i.e., 0.12 should be entered as 12).)

	Osaka		Yokohama
ROI		%		%

2.

Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 16%. Compute the residual income for each division.

	Osaka	Yokohama
Average operating assets
Net operating income
Minimum required return on average assets
Residual income

3.

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

	Yes
	No