Far Sight is a division of a major corporation. The following data are for the latest year of operations:                  Sales $24,480,000 Net operating Income $1,738,080 Average operating assets $6,000,000 The company’s minimum required rate of return 16% Required: a. What is the division's return on investment (ROI)? b. What is the division's residual income?

Survey of Accounting (Accounting I)
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ISBN:9781305961883
Author:Carl Warren
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Chapter14: Decentralized Operations
Section: Chapter Questions
Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...
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Far Sight is a division of a major corporation. The following data are for the latest year of operations:                 

Sales

$24,480,000

Net operating Income

$1,738,080

Average operating assets

$6,000,000

The company’s minimum required rate of return

16%

Required:

a. What is the division's return on investment (ROI)?
b. What is the division's residual income? 
 

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