Sales $ 12,080,000 $ 35,100,000 $ 25,100,000

Average operating assets $ 3,020,000 $ 7,020,000 $ 5,020,000

Net operating income $ 531,520 $ 526,500 $ 627,500

Minimum required rate of return 9.00 % 9.50 % 12.50 %

Required:

1. Compute the margin, turnover, and return on investment (ROI) for each division.

2. Compute the residual income (loss) for each division.

3. Assume that each division is presented with an investment opportunity that would yield a 10% rate of return.

a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity?