The following information is available about the status and operations of the Ma

Question

The following information is available about the status and operations of the Manufacturing Division of Taylor Company, which has a hurdle rate of 4% Divisional identifiable average assets $413,185 Divisional income from operations Divisional sales revenue S 20,696 $ 370,082 a. Compute the ROI for the Manufacturing Division (Round your answer to 1 decimal place.) b. Break the Manufacturing Division ROl down using the DuPont formula. (Round your answers to 2 decimal places.) ac Profit Margin Investment Turnover c. Compute the residual income for the Manufacturing Division. (Round your answer to the nearest dollar amount.) 0 Type here to search

Explanation / Answer

Return on investment = Segment margin / amount invested Operating income 20696 Average invested assets 413185 Return on investment 5.0% Profit margin = operating income / sales Operating income 20696 Sales revenue 370082 Profit margin 5.59% Investment turnover = Sales revenue / amount invested Sales revenue 370082 Average invested assets 413185 Investment turnover 0.90 Residual income = Operating income - ( Required rate * total assets) Operating income 20696 Minimum rate 4.00% Amount invested 413185 Minimum rate *amount invested 16527 Residual income 4169

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