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Question 2 (14 points) Last month's data for a company with two divisions was as follows: Division 1 Division 2 Sales $300,000 $200,000 Variable expenses

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Question 2 (14 points) Last month's data for a company with two divisions was as follows: Division 1 Division 2 Sales $300,000 $200,000 Variable expenses as a percentage of sales 40% 50% Traceable fixed expenses $130,000 $80,000 Average operating assets $180,000 $170,000 Minimum required rate of return 10% 12% The company's fixed expenses total $220,000 per month. Required: 1. Prepare a segmented income statement in good form. (7 marks) 2. Using margin and turnover, calculate the return on investment (ROI) for Division 2. (2 marks) 3. Calculate the residual income for Division 2. (3 marks) 4. List two concerns a company might have about using return on investment (ROI) as a performance measure. (2 marks)

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