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please answer part b. i would appreciate it :) Presented below is selected information for three regional divisions of Medina Company. Divisions West North South
please answer part b. i would appreciate it :)
Presented below is selected information for three regional divisions of Medina Company. Divisions West North South $300,000 $500,000 $400,000 $140,000 $360,000 $210,000 Contribution Margin Controllable Margin Av. Operating Assets Minimum Rate of Return $1,120,000 $2,000,000 $1,500,000 13% 15% 10% Instructions (a) (b) (C) Compute the return on investment for each division Compute the residual income for each division Assume that each division has an investment opportunity that would provide a rate of return of 16% 1 ROI is used to measure performance, which division or divisions will probably make the additional Ivestment? 2 Ir residual income is used to measure performance, which divisions or divisions will probably make the additional investment? (a) Contribution Margin Controllable Margin Average Operating Assets Return on investment Minimum Required ROI North $300,000 $140,000 $1,120,000 12.50% 139 Divisions West 5500,000 $360,000 $2,000,000 18% 15% South 8400.000 $210,000 $1,500,000 14% 10% (b) Divisions North West South Avern Operating Assets * Minimum od ROI Minimum Required ROI Current Residual Presented below is selected information for three regional divisions of Medina Company. Divisions West North South $300,000 $500,000 $400,000 $140,000 $360,000 $210,000 Contribution Margin Controllable Margin Av. Operating Assets Minimum Rate of Return $1,120,000 $2,000,000 $1,500,000 13% 15% 10% Instructions (a) (b) (C) Compute the return on investment for each division Compute the residual income for each division Assume that each division has an investment opportunity that would provide a rate of return of 16% 1 ROI is used to measure performance, which division or divisions will probably make the additional Ivestment? 2 Ir residual income is used to measure performance, which divisions or divisions will probably make the additional investment? (a) Contribution Margin Controllable Margin Average Operating Assets Return on investment Minimum Required ROI North $300,000 $140,000 $1,120,000 12.50% 139 Divisions West 5500,000 $360,000 $2,000,000 18% 15% South 8400.000 $210,000 $1,500,000 14% 10% (b) Divisions North West South Avern Operating Assets * Minimum od ROI Minimum Required ROI Current Residual Step by Step Solution
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