Question: Bancroft, Inc. has three separate divisions: Division A, Division B, and Division C. Information about the three divisions follows: Division A Division B Division C

Bancroft, Inc. has three separate divisions: Division A, Division B, and Division C. Information about the three divisions follows:

	Division A	Division B	Division C
Operating income	$49,500	$44,800	$242,000
Average operating assets	$500,000	$166,000	$824,000

Each division manager will receive a bonus if the return on investment of the division is greater than 25% and residual income is in excess of $40,000. The company uses a cost of capital rate of 18%. Which division manager(s) is eligible for a bonus?

Responses

Division C only.

Division A and Division B.

Division B only.

Division B and Division C.

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