Simply Sweets Inc. has two different product lines, cupcakes and cookies. The following is the most recent financial information

Cupcakes Cookies

Total sales $$300,000$ $$500,000$

Net operating income $$15,000$ $$50,000$

Average operating assets $$100,000$ $$250,000$

The company has indicated that the minimum required return for any product line it offers is $16\%.$

A$.$ Compute the ROI of each product line stated in terms of margin and turnover. Round to one decimal place. Which product line appears to be doing better and why? $6$ marks

Cupcakes Cookies

Margin

Turnover

ROI

Better division

Reason

b$.$ Calculate the residual income of each product line. Which product line appears to be doing better and why? $6$ marks

residual income

better decision

why

c$.$ Each division has been presented with a new investment opportunity which will generate a return on investment of $16\%.$ Indicate if each product line manager would accept or reject the opportunity if first, they are evaluated using ROI and second, if they are evaluated using residual income

cupcakes cookies

roi

residual income