Question
Selected sales and operating data for three divisions of three different companies are given below: Division A Division B Division C Sales $ 6,000,000 $
| Selected sales and operating data for three divisions of three different companies are given below: |
| Division A | Division B | Division C | |||||||
| Sales | $ | 6,000,000 | $ | 10,000,000 | $ | 9,100,000 | |||
| Average operating assets | $ | 1,200,000 | $ | 2,500,000 | $ | 1,820,000 | |||
| Net operating income | $ | 306,000 | $ | 910,000 | $ | 213,850 | |||
| Minimum required rate of return | 20 | % | 36.4 | % | 17 | % | |||
| Required: | |
| 1. | Compute the return on investment (ROI) for each division, using the formula stated in terms of margin and turnover. (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
| ROI | |
| Division A | % |
| Division B | % |
| Division C | % |
| 2. | Compute the residual income for each division. (Negative amounts should be indicated by a minus sign. Leave no cells blank - be certain to enter "0" wherever required.) |
| Division A | Division B | Division C | |
| Residual income | $ | $ | $ |
| 3. | Assume that each division is presented with an investment opportunity that would yield a rate of return of 22%. |
| a. | If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? |
| Division A | (Click to select)AcceptReject |
| Division B | (Click to select)AcceptReject |
| Division C | (Click to select)AcceptReject |
| b. | If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? |
| Division A | (Click to select)RejectAccept |
| Division B | (Click to select)AcceptReject |
| Division C | (Click to select)RejectAccept |
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Internal Control And Internal Audit In Non Profit Organizations A Practical Model
Authors: Kamal Bayramov
1st Edition
6203464015, 978-6203464016
