(ROI, RI) ABC Wholesaling sells a broad line of clothing goods to specialty retail and department stores. For 1998, the company’s Mexican Division had the following performance targets:

Asset turnover 1.8 Profit margin 8%

Actual information concerning the performance of the Mexican Division in 1998 follows:

a. For 1998, did the Mexican Division achieve its target objectives for ROI, asset turnover, and profit margin?

b. Where, as indicated by the performance measures, are the most likely areas to improve performance?

c. If the company has an overall target return of 13 percent, what was the Mexican Division’s residual income for 1998?

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Total assets at beginning of year $2,400,000 Total assets at end of year Sales Operating expenses 3,600,000 6,000,000 5,640,000