1. The Eastern division of Delgado, Inc. is an investment center. It has reported the following data for the first quarter:

Sales $400,000

Variable expenses $260,000

Contribution margin $140,000

Fixed expenses $40,000

Net operating income $100,000

Average operating assets $475,000

The division has a target rate of return of 18% and an effective tax rate of 24%.

1. Calculate the divisions margin.

2. Calculate the divisions turnover.

3. Calculate the divisions return on investment (ROI). How would ROI be impacted if average operating assets increased, but all else remained the same?

4. Calculate the divisions residual income. How might residual income be impacted if operating income increased, but all else remained the same?