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Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Training Services $530,000 $780,000 Athletic Wear $600,000 $106,000 $120,000 $ 21, 200 $156,000 $ 31,200 15% $ 30,000 13% Sales Average operating assets Operating income Minimum required rate of return Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. Fitness training Spa services Athletic wear ROI Residual income % % % 2. Compute the residual income for each division. 13% Fitness Training Spa Services Athletic Wear 3. Assume that each division is presented with an investment opportunit

Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Training Services $530,000 $780,000 Athletic Wear $600,000 $106,000 $120,000 $ 21, 200 $156,000 $ 31,200 15% $ 30,000 13% Sales Average operating assets Operating income Minimum required rate of return Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. Fitness training Spa services Athletic wear ROI Residual income % % % 2. Compute the residual income for each division. 13% Fitness Training Spa Services Athletic Wear 3. Assume that each division is presented with an investment opportunit

Managerial Accounting
Managerial Accounting
15th Edition
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:Carl Warren, Ph.d. Cma William B. Tayler
Chapter10: Evaluating Decentralized Operations
Section: Chapter Questions
Problem 13E: The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as...
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3. Assume that each division is presented with an investment opportunity that would yield a rate of return of 21%. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Fitness Training Spa Services Athletic Wear b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Fitness Training Spa Services Athletic Wear
Transcribed Image Text:3. Assume that each division is presented with an investment opportunity that would yield a rate of return of 21%. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Fitness Training Spa Services Athletic Wear b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Fitness Training Spa Services Athletic Wear
Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Training Services $530,000 $780,000 Athletic Wear $600,000 $106,000 $ 21, 200 $156,000 $ 31,200 15% $120,000 $ 30,000 13% Sales Average operating assets Operating income Minimum required rate of return Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. Fitness training Spa services Athletic wear ROI Residual income % % % 2. Compute the residual income for each division. 13% Fitness Training Spa Services Athletic Wear 3. Assume that each division is presented with an investment opportunit
Transcribed Image Text:Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Training Services $530,000 $780,000 Athletic Wear $600,000 $106,000 $ 21, 200 $156,000 $ 31,200 15% $120,000 $ 30,000 13% Sales Average operating assets Operating income Minimum required rate of return Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. Fitness training Spa services Athletic wear ROI Residual income % % % 2. Compute the residual income for each division. 13% Fitness Training Spa Services Athletic Wear 3. Assume that each division is presented with an investment opportunit
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