Operating Profit Margin, Asset Turnover, Return on Investment $($ROI$),$ and Residual Income $($RI$).$ Financial information for Livingston Tech Support, Inc., for the most recent fiscal year appears as follows. All dollar amounts are in thousands.

Livingston Tech Support, Inc.

Segmented Income Statements

for the Current Fiscal Year

$($dollar amounts are in thousands$)$

Web Division IT Division

Sales $ $7,000$ $ $12,000$

Cost of goods sold $2,3002,700$

Gross margin $ $4,700$ $ $9,300$

Allocated overhead $($from corporate$)1,2001,800$

Selling and administrative expenses $2,6503,350$

Operating income $ $850$ $ $4,150$

Income tax expense $(30\%$ rate$)2551,245$

Net income $ $595$ $ $2,905$

Livingston Tech Support, Inc.

Segmented Balance Sheets

at End of Most Recent Fiscal Year

$($dollar amounts are in thousands$)$

Web Division IT Division

Ending Balance Beginning Balance Ending Balance Beginning Balance

Assets

Cash

$ $600$ $ $390$ $ $1,500$ $ $1,150$

Accounts receivable

$300310600620$

Inventory

$800730950900$

Total current assets

$ $1,700$ $ $1,430$ $ $3,050$ $ $2,670$

Property, plant and equipment $($net$)$

$2,0001,8006,1006,020$

Investment in Global, Inc.

$1,5001,500$

Land $($held for sale$)$

$2,1002,10000$

Total assets $ $5,800$ $ $5,330$ $ $10,650$ $ $10,190$

Liabilities and owners' equity

Accounts payable

$ $790$ $ $610$ $ $1,550$ $ $980$

Other current liabilities

$160145420300$

Total current liabilities

$ $950$ $ $755$ $ $1,970$ $ $1,280$

Long$-$term liabilities

$0000$

Total liabilities

$ $950$ $ $755$ $ $1,970$ $ $1,280$

Total owners' equity $4,8504,5758,6808,910$

Total liabilities and owners' equity $ $5,800$ $ $5,330$ $ $10,650$ $ $10,190$

Required:

Calculate average operating assets for each division. $($Hint: land held for sale and investments in Global, Inc., are not operating assets.$)$

Calculate operating profit margin, asset turnover, and return on investment for each division.

Calculate residual income for each division assuming a cost of capital rate of $12$ percent.

What does the information from requirements b and c tell us about each division?Operating Profit Margin, Asset Turnover, ROI, and RI

$($Note: All dollar amounts are in thousands as presented in the textbook.$)$

a$.$

b$.$