Meiji Isetan Corporation 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?

	Osaka		Yokohama
ROI		%		%

	Osaka	Yokohama
Residual income

Yesradio button unchecked1 of 2Noradio button unchecked2 of 2