Urban Ltd specialises in guitars and has three divisions: (1) Electric Guitars, (2) Acoustic Guitars, and (3) Guitar Strings.

The following information relates to the three divisions:

	Electric Guitars	Acoustic Guitars	Guitar Strings
Sales ($)	1,350,000	660,000	1,050,000
Cost of sales ($)	750,000	300,000	405,000
Other expenses ($)	465,000	270,000	525,000
Investment in division ($)	720,000	300,000	450,000

Urban Ltd has a required rate of return of 15%.

Required

a. Calculate the divisional profit for each division. (1 mark)

b. Calculate the return on investment (ROI) for each division. (1.5 mark)

c. Calculate the residual income (RI) for each division. (1.5 mark)

d. Discuss the performance of each division using the measures calculated above. Is there a standout best performing division? (4 marks)