Morgan Industries manufactures die machinery. To meet its expansion needs, it recently acquired one of its suppliers, Vienna Steel in 2000. To maintain Vienna's separate identity, Morgan reports Vienna's operations as an investment strategic business unit (SBU). Morgan monitors all of its investment SBUs on the basis of return on investment (ROI). Management bonuses are based on ROI, and all investment SBUs are expected to earn a minimum return of 12 percent before income taxes. Vienna's ROI has ranged from 14 percent to 18 percent since 2000. The company recently has the opportunity for a new investment that would have yielded 13 percent ROI. However, division management decided against the investment because it believed that the investment would decrease the division's overall ROI. The 2002 operating statement for Vienna follows. The division's operating assets were $13,000,000 at the end of 2002, and $12,264,150 in 2001. VIENNA DIVISION Operating Statement For Year Ended December 31, 2002

Sales	$25,000,000
Cost of goods sold	16,600,000
Gross profit	8,400,000
Operating expenses
Administration	$2,340,000
Selling	3,810,000	6,150,000
Income before income taxes	$2,250,000

REQUIRED 1. Calculate the following performance measures for 2002 for Vienna division: a. Return on Investment (ROI), where investment is defined as the average investment in operating assets employed. (6 marks) b. Residual Income (RI) calculated on the basis of average operating assets employed.