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LO 15-6 Problem 15-23 Comparing return on investment and residual income tes three investment centers. The following financial statements apply to the Helena Corporation opera investme nt center named Bowman Division BOWMAN DIVISION Income Statement CHECK FIGURE c. 24.34% For the Year Ended December 31, 2018 $138,000 78,000 60,000 Sales revenue Cost of goods sold Gross margin Operating expenses nd lly Selling expenses Depreciation expense (6,000) (8,000 46,000 Operating income Nonoperating item (16,000) Loss on sale of land Net income BOWMAN DIVISION Balance Sheet As of December 31, 2018 Assets Cash Accounts receivable Merchandise inventory Equipment less accum. dep. Nonoperating assets $18,898 42,266 37,578 90,258 $198,000 Total assets Liabilities Accounts payable Notes payable $ 9,637 72,000 Stockholders' equity Common stock Retained earnings 80,000 36,363 $198,000 Total liab. and stk. equity sed Required a. Which should be used to determine the rate of return (ROI) for the Bowman investment center, operating income or net income? Explain your answer D. Which should be used to determine the ROI for the Bowman investment center, operating assets or total assets? Explain your answer . Calculate the ROI for Bowman. Round the computation to two decimal points. d. Hel ena has a desired ROI of 10 percent. Headquarters has $96,000 of funds to assign to its invest- ment centers. The manager of the B of 12 percent. The divisions owman Division has ar he manage ld reject the other two divisions have investment opportunities that yield only 11 percent. Even r of Bowman rejects the additional funding. Explain why the manager of Bowman funds under these circumstances. Round the computation to two decimal points would u pe ds Ro residual income could be used to encourage the manager to accept the additional ound the computation to whole dollars

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