E$23-27.$ ROI and Residual Income: Basic Computations

Watkins Associated Industries is a privately held conglomerate. Assume that the company uses return on investment and residual income as two of the evaluation tools for division managers. The company has a minimum desired rate of return on investment of $15\%.$ Selected operating data for three of the divisions of the company follow.

$\backslash$table$[[,$Trucking Division,Seafood Division,Construction Division$],[\backslash$table$[[$Saies$.],[$Operating assets$]],$$$6,450,000,$$$1,845,000,$$$5,200,000$

Required

b$.$ Compute the residual income for each division.

E$23-28.$ ROI and Residual Income: Assessing Performance

Refer to the computations in the previous exercise E$23-27.$ Assess the performance of the division mour conclusions on conclusions on ROI. Assess the performance of the division managers, basing

E$23-27.$