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1). Juniper Design Ltd. of Manchester, England, is a company specializing in providing design services to residential developers. Last year, the company had net operating income of $430,000 on sales of $2,100,000. The companys average operating assets for the year were $2,300,000 and its minimum required rate of return was 12%.

Compute the companys residual income for the year.

2). Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow:

1. For each division, compute the return on investment (ROI) in terms of margin and turnover.

2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 16%. Compute the residual income for each division.

3. Is Yokohamas greater amount of residual income an indication that it is better managed?

3). Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below:

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

2. Which divisional manager seems to be doing the better job?

Division Osaka Yokohama Sales Net operating income Average operating assets 3,200,000 13,000,000 $ 9,600,000$ 26,000,000 $ 672,000 2,340,000

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