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 Wales Queensland Sales Average operating assets Net operating income Property, plant, and equipment (net) $1,711,000 2,832,000 $ 590,000 590,000 $102,660 113,280 $259,000 209,000 Required: 1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover 2. Which divisional manager seems to be doing the better job? Complete this question by entering your answers in the tabs below Required 1Required 2 Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover. (Round your answers to 2 decimal places.) Margin Turnover ROI Queensland division New South Wales division

Explanation / Answer

Answer:-A)-Retun on Investment:-

           =(Net operating income/Sales)*(Sales/Average operating assets)

Queens land Division =($102660/$1711000)*($1711000/$590000)

          =6%*2.9 =17.40%

New South wales Division=($113280/$2832000) *($2832000/$590000)

           =4%*4.8 =19.2%

   

B)-. In terms of ROI Queens land Division have (ie- 17.40%) less than New South wales Division (ie-19.20%) hence the New South wales Division seems to be doing the better job compare to Queens land Division.

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