Selected operating data on the two divisions of York Company are given below: Di

Question

Selected operating data on the two divisions of York Company are given below:

Division

Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover. (Do not round intermediate calculations. Round your answers to 2 decimal places. Omit the "%" sign in your response.)

2---answer is western division******!!!!!!

Division

      Eastern    Western   Sales $ 936,000    $ 1,972,000     Average operating assets $ 520,000    $ 580,000   Net operating income $ 98,280    $ 147,900   Property, plant, and equipment $ 249,000    $ 199,000

Explanation / Answer

1. for eastern division , we have, sales = $936,000 , total cost incurred(investment) =$(520,000 +98,280+249,000)=$867,280 So, ROI(eastern) = (936,000-867,280)/867,280 = 68720/867,280 = 0.08 for western division, sales =$1,972,000 ,total cost(investment)=$(580,000+147,900+199,000)=$926,900 So, ROI(western) = (1,972,000 - 926,900)/926,900 = 1045100/926,900 = 1.13 2. Since , ROI(western)>ROI(eastern) , So, western manager is doing better job.

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