The following is divisional information for EVQ Enterprises
East Division West Division
Operating income $250,000 $200,000
Net sales 2,225,000 1,575,000
Total assets at Jan. 1 1,500,000 840,000
Total assets at Dec .31 1,200,000 1,000,000
The target rate of return is 12% for the East Division and is 10% for the West Division.
Compute the return on investment for each division. (Round to one decimal place.)
What will be an ideal response
Average assets: (Beginning assets + Ending assets) / 2
East Division = ($1,500,000 + $1,200,000 ) / 2
= $2,700,000 / 2
= $1,350,000
West Division = ($840,000 + $1,000,000 ) / 2
= $1,840,000 / 2
= $920,000
Return on investment = Operating income / Average total assets
East Division = $250,000 / $1,350,000
= 18.5%
West Division = $200,000 / $920,000
= 21.7%
You might also like to view...
Most people tend to buy more if they can "charge it" rather than pay cash
a. True b. False Indicate whether the statement is true or false
Which of the following is consistent with a pure chase strategy?
a. vary production levels to meet demand requirements b. vary workforce to meet demand requirements c. vary production levels and workforce to meet demand requirements d. little or no use of inventory to meet demand requirements e. all of the above.
One of the purposes of a subject line in an email message is to allow recipients to sort through and prioritize the reading of messages
Indicate whether the statement is true or false
It is mandatory for both the employer and employee to pay ________
A) FICA B) SUTA C) employee income tax D) federal unemployment tax