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Required Information

Bentler Industrles provides high$-$technology navigation and communication equipment for the aerospace and shipbullding

Industrles. It is organized Into two divisions, Aeronautics and Marlne. The division presidents are given wide decision$-$

making authority that covers operations, marketing, and asset acquisition and disposal. Bentler evaluates the division

presidents on$,$ among other things, ROI In thelr respective divisions. ROI Is based on after$-$tax divisional Income and

beginning$-$of$-$year assets. DIvisional Income includes allocated corporate overhead.

For the most recent year $($year $3),$ data from the two divisions shows the following:

The tax rate applied at Bentler is $20$ percent.

Required:

a$.$ Compute divisional Income for year $3$ for each of the divisions.

b$1.$ Evaluate the two divisions based on the Information from the divisional Income computed.

b$2.$ In terms of divisional Income, which division performed better?

c$1.$ Compute ROI for year $3$ for each of the divisions.

c$2.$ Which division performed better?

d$1.$ Compute residual Income for year $3$ for each of the divisions. Bentler uses a cost of capital of $12$ percent.

d$2.$ Which division performed better?