Outback Ltd. of Australia has two divisions, one in Perth and one in Darwin. Selected data on the two divisions follow:

	Perth	Darwin
Sales	$9,000,000	$20,000,000
Operating income	$630,000	$1,800,000
Average operating assets	$3,000,000	$10,000,000

Compute the return on investment (ROI) for each division.

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.

Is Darwin Divisions greater residual income an indication that it is better managed? Explain.