Selected operating data for two divisions of Outback Brewing, Ltd., of Australia

Question

Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below: Division New South Sales Average operating assets Net operating income Property, plant, and equipment (net) Queensland Wales $1,456,000 $2,745,000 $ 560,000 610,000 $ 116,480 $137,250 $ 256,000 206,000 Required 1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover. (Round your Turnover answers to 2 decimal places. Round your Margin and ROl percentage answers to 2 decimal places (i.e., 0.1234 should be entered as 12.34).) Margin Turnover ROI Queensland division New South Wales division 2. Which divisional manager seems to be doing the better job? Queensland division New South Wales division

Explanation / Answer

Outback Brewing Limited All Amounts in $ 1. Rate of Return for each division Net Operating Income/Average Operating Assets Net Operating Income/Turnover Queensland 21% 8% New South Wales 23% 5% 2. Based on the first ratio, the New South Wales Manager seems to be doing a better job. However, based on the second ratio, the Queensland Manager seems to be doing a better job.

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