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Milano Corporation has three operating divisions and requires a 12% return on all investments. Selected infor- mation is presented here: Division A Division B Division
Milano Corporation has three operating divisions and requires a 12% return on all investments. Selected infor- mation is presented here: Division A Division B Division C Revenues . . . . . . . . . . . . . . . $500,000 ? ? Operating income . . . . . . . . . $ 60,000 ? $80,000 Operating assets . . . . . . . . . . $250,000 $600,000 ? Margin . . . . . . . . . . . . . . . . . . ? 1 2% ? Turnover . . . . . . . . . . . . . . . . ? 1 turn 2 turns ROI . . . . . . . . . . . . . . . . . . . . ? ? ? Residual income . . . . . . . . . . ? ? $20,000 Required: a. Calculate the missing amounts for each division. b. Comment on the relative performance of each division. c. Provide an example to show how residual income improves decision making at the divisional level
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