hree divisions of Jameson Co$.$ report the following sales and operating data:

Fitness Training Spa Services Athletic Wear

Sales $ $640,000$ $ $840,000$ $ $700,000$

Average operating assets $ $160,000$ $ $210,000$ $ $140,000$

Operating income $ $25,600$ $ $33,600$ $ $35,000$

Minimum required rate of return $13\%15\%13\%$

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 $20\%.$

a$.$ If performance is being measured by ROI, 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?