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Calculate the missing amounts for each division

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Question - Milano Corporation has three operating divisions and requires a 12% return on all investments. Selected information is presented here:

Division A Division B Division C

Revenues . . . . . . . . . . . . . . . $500,000 ? ?

Operating income . . . . . . . . . $ 60,000 ? $80,000

Operating assets . . . . . . . . . . $250,000 $600,000 ?

Margin . . . . . . . . . . . . . . . . . . ? 1 2% ?

Turnover . . . . . . . . . . . . . . . . ? 1 turn 2 turns

ROI . . . . . . . . . . . . . . . . . . . . ? ? ?

Residual income . . . . . . . . . . ? ? $20,000

Required:

a. Calculate the missing amounts for each division.

b. Comment on the relative performance of each division.

c. Provide an example to show how residual income improves decision making at the divisional level.

Reference no: EM131815353

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