Question
Warren Company has two divisions with the following results: Ashland Erie Sales revenue $ 450,000 $ 1,200,000 Divisional expenses 270,000 850,000 Segment income $ 180,000
Warren Company has two divisions with the following results: Ashland Erie Sales revenue $ 450,000 $ 1,200,000 Divisional expenses 270,000 850,000 Segment income $ 180,000 $ 350,000 Average invested assets $ 1,200,000 $ 4,000,000 Warren Company has a hurdle rate of 12%. a. Calculate the return on investment for each division. (Round your answers to 2 decimal places.) b. Break each divisions return on investment down into its component parts using the DuPont method. (Round your profit margin to 2 decimal places and investment turnover to 3 decimal places.) c. Calculate the residual income for each division. (Negative amounts should be indicated by a minus sign.)
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