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Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division Division Division c Sales $15,900,000 $ 28,720,000 $ 20,720,000 Average operating assets $ 3,180,000 $ 7,180,000 $ 5,180,000 Net operating Income $ 636,000 430,800 621,600 Minimum required rate of return 7.00 7.500 12.000 $ $ Required: 1 Compute the margin, turnover, and return on investment (ROI) for each division 2. Compute the residual income (loss) for each division 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return 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? Complete this question by entering your answers in the tabs below. Reg1 Reg 2 Reg JA Reg 36 Compute the margin, turnover, and return on investment (ROI) for each division. (Do not round intermediate calculations Round your answers to 2 decimal places) Margin Turnover ROI Division A Division Division Reg 2 > 2 Problem 11-17 (Algo) Return on Investment (ROI) and Residual Income (LO11-1, LO11-2] Financial data for Joel de Paris, Inc., for last year follow. Joel de Paris, Inc. 100 points Balance Sheet Beginning Balance Ending Balance eBook Print References Assets Cash Accounts receivable Inventory Plant and equipment, bet Investment in Buisson, S.A. Land (undeveloped Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity $ 138,000 350.000 575.000 767,000 402,000 252,000 $ 2, 484,000 $ 139,000 491,000 475,000 775,000 427,000 246.000 $ 2,543,000 $ 388,000 1,016.000 1,080,000 $ 2,484,000 $ 340,000 1,016,000 1,187,000 $ 2,543,000 Joel de Paris, Inc. Income Statement Sales Operating expenses Het operating income Interest and taxes Interest expense $ 130.000 TAK expense 197,000 Het incon 54,255,000 3,659,300 595,700 327.000 268,700 $ 2 The statement Sales Operating expenses Het operating income Interest and taxes Interest expense $ 130,000 Tax expense 197.000 Net Income $ 4,255,000 3,659,300 595,700 100 points 327,000 $ 268,700 BOOM perces The company paid dividends of $161700 last year. The "Investment in Bulsson, S.A." on the balance sheet represents an investment in the stock of another company. The company's minimum required rate of return of 15% Required: 1. Compute the company's average operating assets for last year 2. Compute the company's margin, turnover, and return on investment (ROI) for last year. (Round "Margin", "Turnover" and "ROI" to 2 3. What was the company's residual income last year? 1 2 % Average operating assets Margin Turnover ROU Residual income % 3 3 100 point Problem 11-21 (Algo) Return on Investment (ROI) and Residual Income (L011-1, LO11-2) I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division "But I want to see the numbers before I make any move. Our division's return on investment (Ron has led the company for three years, and I don't want any letdown" Billings Company is a decentralized wholesale with five autonomous divisions. The divisions are evaluated on the basis of ROI, with year end bonuses given to the divisional managers who have the highest ROls. Operating results for the company's Office Products Division for this year are given below. Bates Variable expenses Contribution margin Fixed expenses Het operating income Divisional average operating annet $ 21,010,000 11,741,200 8,060,000 6,040.000 52,020.000 $4,263,000 The company had an overall return on investment (ROI) of 18.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by 52,350,000. The cost and revenue characteristics of the new product line per year would be: Variable expenses Fixed expenses 59.396,500 656 of wales $2,564.875 3 100 points Required: 1. Compute the Office Products Division's margin, turnover, and ROI for this year 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line 4. If you were in Dell Havasi's position, would you accept or reject the new product line? 5. Why do you suppose headquarters is anxious for the Office Products Division to add the new product line? 6. Suppose that the company's minimum required rate of return on operating assets is 15% and that performance is evaluated using residual income a Compute the Office Products Division's residual income for this year b. Compute the Office Products Division's residual income for the new product line by itselt. c.Compute the Office Products Division's residual income for next year assuming that it performs the same as this year and adds the new product line. d. Using the residual income approach, if you were in Dell Havasi's position, would you accept or reject the new product line? B004 Print References Complete this question by entering your answers in the tabs below. Rea I to 3 Reg 4 Reg 5 Req6A to 6C Reg 60 1. Compute the Office Products Division's margin, turnover, and Rol for this year. 2. Compute the Office Products Division's margin, turnover, and ROI for the new product line by itself, 3. Compute the Office Products Division's margin, turnover, and ROI for next year assuming that it performs the same as this year and adds the new product line. (Do not round intermediate calculations, Round your answers to 2 decimal places) Show less 1. ROI for this year ROI for the new product line by