Question 2: Responsibility accounting and performance evaluation [15 marks] Cool Roof is a department of the main business The Hot Tin Roof. End of year results for Cool Roof are as follows: Target profit margin Asset turnover ratio Cost of capital * Weighted average cost of capital (WACC) Tax rate Investment in Cool Roof 12% 1.43 times 14% 11.30% 30% Current assets Non Current assets Current liabilities Sales Variable Costs Fixed costs Overhead allocated $1,125,000 $140,000 $280,000 $110,000 $320,000 $95,000 $60,000 $25,000 *NB the cost of capital is used as the benchmark for the ROI Required: 1. Calculate Cool Roof's profit for the year. Ensure that you show all inputs used. [2 marks] 2. Calculate the ROI that Cool Roof has achieved for the year. Comment on the performance of Cool Roof compared with how they were expected to perform. Ensure that you show all inputs and formulas used. [3.5 marks] 3. Provide a calculation for the residual income ensuring that you show all inputs and formulas used. What does this figure mean for Cool Roof? [4 marks] 4. Provide a calculation for the EVA ensuring that you show all inputs and formulas used. What does your calculated figure mean for Cool Roof? [5.5 marks]