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Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Sales Average operating assets Division B Division

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Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Sales Average operating assets Division B Division A $ 16,000,000 $ 36,000,000 $ 3,200,000 Net operating income $ Minimum required rate of return $ 7,200,000 576,000 9.50% 752,000 9.00% $ Division C $ 20,800,000 $ 5,200,000 540,800 10.40% $ 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? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Compute the margin, turnover, and return on investment (ROI) for each division. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Margin Turnover Division A % Division B % Division C % ROI % % % Compute the residual income (loss) for each division. (Do not round intermediate calculations. Loss amounts should be indicated by a minus sign.) Residual income (loss) Division A Division B Division C Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? Division A Division B Division C Assume that each division is presented with an investment opportunity that would yield a 10% rate of return. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A Division B Division C

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