Three divisions of Jameson Co. report the following sales and operating data: Athletic Wear $550,000...
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Three divisions of Jameson Co. report the following sales and operating data: Athletic Wear $550,000 $110,000 $ 33,000 16% Sales Average operating assets Operating income Minimum required rate of return Fitness training Spa services Athletic wear Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. ROI Residual income Fitness Spa Training Services $650,000 $900,000 $180,000 $ 45,000 18% $130,000 $ 32,500 % % % 2. Compute the residual income for each division. 16% Fitness Training Spa Services Athletic Wear
Three divisions of Jameson Co. report the following sales and operating data: Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. 2. Compute the residual income for each division. 3. Assume that each division is presented with an investment opportunity that would yield a rate of return of 26%. a. If performance is being measured by ROL, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity
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