Presented below is selected information for three regional divisions of Yono Com
ID: 2389808 • Letter: P
Question
Presented below is selected information for three regional divisions of Yono Company.North West South
Contribution margin $300,800 $499,200 $400,500
Controllable margin $151,000 $400,300 $225,100
Average operating assets $943,750 $1,740,435 $1,406,875
Minimum rate of return 12% 15% 9%
Compute the return on investment for each division. Round to 1 decimal place.
North Division _____%
West Division _______%
South Division _____%
Compute the residual income for each division. Round to 0 decimal places.
North Division ______$
West Division ______$
South Division ______$
Explanation / Answer
Compute the return on investment for each division. Round to 1 decimal place.
North Division $151,000 / $943,750 = 16%
West Division $400,300 / $1,740,435 = 23%
South Division $225,100 / $1,406,875 = 16%
Compute the residual income for each division. Round to 0 decimal places.
North Division $151,000 - ($943,750 x 12%) = $37,750
West Division $400,300 - ($1,740,435 x 15%) = $139,235
South Division $225,100 - ($1,406,875 x 9%) = $98,481