Financial data for Beaker Company for last year appear below:

Beaker Company
Statements of Financial Position
	Beginning Balance			Ending Balance
Assets:
Cash	$	346,000		$	324,792
Accounts receivable		202,000			159,000
Inventory		298,000			299,000
Plant and equipment (net)		463,000			455,000
Investment in Cedar Company		318,000			293,000
Land (undeveloped)		237,000			237,000
Total assets	$	1,864,000		$	1,767,792
Liabilities and owners' equity:
Accounts payable	$	249,000		$	228,000
Long-term debt		855,000			855,000
Owners' equity		760,000			684,792
Total liabilities and owners' equity	$	1,864,000		$	1,767,792

Beaker Company
Income Statement
Sales				$	1,790,000
Less operating expenses					1,440,950
Net operating income					349,050
Less interest and taxes:
Interest expense	$	98,600
Tax expense		125,658			224,258
Net income				$	124,792

The company paid dividends of $200,000 last year. The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.

Required:

a. Compute the company's margin, turnover, and return on investment for last year.

b. The Board of Directors of Beaker Company has set a minimum required return of 25%. What was the company's residual income last year?

Given the following data:

Average operating assets	$	1,080,000
Total liabilities	$	162,000
Sales	$	540,000
Contribution margin	$	297,000
Net operating income	$	86,400

Return on investment (ROI) is:

Multiple Choice

• 16.0%

• 8.0%

• 55.0%

• 27.5%