The following information applies to the questions displayed below.] Selected sa

Question

The following information applies to the questions displayed below.]

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. (Round all calculations to 2 decimal places, e.g., .1234 as 12.34. Omit the "%" sign in your response.)

#1.)

#2) Requirement 2:

Compute the residual income for each division. (Leave no cells blank, be certain to enter "0" wherever required. Negative amounts should be indicated by a minus sign. Omit the "$" sign in your response.)

$

#3)

Assume that each division is presented with an investment opportunity that would yield a 19% rate of return.

If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject?

If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject?

Selected sales and operating data for three divisions of different structural engineering firms are given as follows:

Explanation / Answer

Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover.

Compute the residual income for each division.

If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject?

b) If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject?

Division A Division B Division C Margin 5.5 8.82 5.87 Turnover 3.55 1.84 2.72 ROI 19.53 16.23 15.97

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