ROI and Residual Income:Basic Computations Watkins Associated Industries is a highly diversified company with three divisions: Trucking, Seafood, and Construction. Assume that the company uses return on investment and residual income as two of the evaluation tools for division managers. The company has a minimum desired rate of return on investment of 10 percent with a 30 percent tax rate. Selected operating data for three divisions of the company follow. Trucking Division Seafood Division Construction Division Sales $1,000,000 $690,000 $900,000 Operating assets 500,000 230,000 380,000 Net operating income 99,000 58,000 57,000 (a) Compute the return on investment for each division. (Round answers to three decimal places.) Trucking ROI = Answer 16.17 Incorrect Seafood ROI = Answer 19.63 Incorrect Construction ROI = Answer 16.18 Incorrect (b) Compute the residual income for each division. Residual Income Trucking Seafood Construction Net operating income $Answer 106,000 Incorrect $Answer 56,000 Incorrect $Answer 59,000 Incorrect Minimum level Answer 55,000 Incorrect Answer 24,000 Incorrect Answer 32,000 Incorrect Residual income $Answer 51,000 Incorrect $Answer 32,000 Incorrect $Answer 27,000 Incorrect (c) Which of the following is an appropriate statement about the performance of the three divisions: Construction has the superior performance. Residual income is always superior to ROI for assessing performance. Seafood has the superior performance.Incorrect Trucking has the superior performance. Which division has the superior performance depends on which performance evaluation metric is used to assess performance.