Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:

DivisionOsakaYokohamaSales$ 10,700,000$ 37,000,000Net operating income$ 749,000$ 3,330,000Average operating assets$ 2,675,000$ 18,500,000

Required:

1. For each division, compute the return on investment (ROI).

2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 16%. Compute the residual income for each division.