Three divisions of Jameson Co report the following sales and operating data Fitness Training Spa Services Athletic Wear Sales $ 600,000 $ 850,000 $ 700,000 Average operating assets $ 120,000 $ 170,000 $ 140,000 Operating income $ 30,000 $ 42,500 $ 42,000 Minimum required rate of return 14 16 14 Required 1 Compute the ROI for each division, using the formula stated in terms of margin and turnover 2 Compute the residual income for each division 3 Assume that each division is presented with an investment opportunity that would yield a rate of return of 26 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

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Three divisions of Jameson Co  report the following sales and operating data  Fitness Training Spa Services Athletic Wear Sales $ 600,000 $ 850,000 $ 700,000 Average operating assets $ 120,000 $ 170,000 $ 140,000 Operating income $ 30,000 $ 42,500 $ 42,000 Minimum required rate of return 14   16   14   Required  1  Compute the ROI for each division, using the formula stated in terms of margin and turnover  2  Compute the residual income for each division  3  Assume that each division is presented with an investment opportunity that would yield a rate of return of 26   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

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Three divisions of Jameson Co. report the following sales and operating data: Fitness Training Spa Services Athletic Wear Sales $ 600,000 $ 850,000 $ 700,000

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	Fitness Training			Spa Services			Athletic Wear
Sales	$	600,000		$	850,000		$	700,000
Average operating assets	$	120,000		$	170,000		$	140,000
Operating income	$	30,000		$	42,500		$	42,000
Minimum required rate of return		14	%		16	%		14	%

*Required:*
1.	Compute the ROI for each division, using the formula stated in terms of margin and turnover.

3.	Assume that each division is presented with an investment opportunity that would yield a rate of return of 26%.

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?