Refer to the following data regarding the three departments from Magenta:

	Bright Magenta	Standard Magenta	Dark Magenta
Total assets	$ 2,400,000	$ 1,000,000	$ 200,000
Total liability	$2,000,000	$ 800,000	$125,000
Revenues	$ 1,200,000	$ 1,000,000	$ 280,000
Operating profit	$ 240,000	$ 130,000	$ 35,000

The company uses a required rate of return of 12% for its departments. Management wants to evaluate the performance of its three departments for deciding which departmental manager is to be promoted.

Required

1. Which is the department with (i) the higher Return on Sales (ROS), (ii) the higher Return on Investment (ROI), and (iii) the higher Residual Income (RI)? (4 marks)

2. The board has set a target ROI of 20% for the Dark Magenta division. What alternatives does the department have for attaining this return? (4 marks)