The following information is available about the status and operations of the Ma

Question

The following information is available about the status and operations of the Manufacturing Division of Taylor Company, which has a hurdle rate of 6%. Divisional identifiable average assets $413,822 Divisional income from operationsS19.772 Divisional sales revenue 369,356 a. Compute the ROI for the Manufacturing Division. (Round your answer to 1 decimal place.) b. Break the Manufacturing Division ROI down using the DuPont formula. (Round your answers to 2 decimal places.) Manufacturing Division ROI Profit Margin Tunover c. Compute the residual income for the Manufacturing Division. (Round your answer to the nearest dollar amount.) Residual l

Explanation / Answer

a.ROI=Income from operations/Average assets

=(19772/413822)=4.8%(Approx).

b.Profit margin=Income from operations/Sales

=(19772/369356)=5.35%

Turnover=Sales/Average assets

=(369356/413822)=0.89

c.Residual income=Income from operations-(Average assets*Hurdle rate)

=19772-(413822*6%)=$(5057)(Negative).

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