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810 v : fr Timber Division A B I (_ Problem 2A: Evaluating Decentralized Operations (17: 15 + 2) Masters Inc. has reported the following information for its Timber and Furniture Divisions: Timber Division Furniture Division Sales: $4,500,000 8800000 Invested assets: $2,650,000 4200000 Total costs and operating expenses: $3,200,000 6950000 Minimum rate of return of the whole company: 20% 20% Required: a) Determine the following for both the Divisions: i) Income from operation: Timber Dlvision .Furnlture Division ii) Prot Margin ii) Investment turnover , iv) Return on Investment (ROI) using DuPont formula . ii) Residual Income b) Which division is more efcient in generating revenue and why? Problem 2B: Comparing ROI and RI as an evaluation tool 112: 8 + 4) . - Masters has offered a new investment project to the Timber Division. . The following information is provided about the new project: Invested assest: $1,500,000 Expected Income from operation: $380,000 Therefore, the return on investment: 25.33% Required: a) Calculate the following, Ifthe manager of Timber Division accepts the new project: i) *Total Operating income ii) *Total Invested assets iii) The total ROI: (Total Income from Operation/Total Invested Assets) v) The total residual income of the Lumber Division \"Total = Lumber diwsmn + New Investment D Relevant formulae: Prot margin = Income from operation/Sales Investment turnover = Sales/Invested assets ROI = Income from operation/Invested assets Dupont ROI formula = Prot margin x Investment turnover Residual income = Operating income - Minimum desired inocme Minimum desired income = Invested assets x minimum rate of return ' b) Should Masters use ROI or RI as their performance evaluation tool to reward the manager while ensuring the overall protability of the company? Explain your answer in the text box below by referring to the calculations for Timber Division in Problem 2A and ZB. Explanation: M