Reference no: EM132542778

The Beatrice company has two divisions, North and South, both of which are treated as investment centers. The following information was collected from the divisions' 2019 financial statements:

                                                                                  North                       South

Net operating income (in $ thousands)                              19243                       9255

Sales (in $ thousands)                                                      188833                     96060

End of year operating assets (in $ thousands)                         63440                       30358

Variable cost (as a fraction of total costs )                               0.65                             0.63

Average selling price per unit                                                     12.81                        12.12

For simplicity, assume end of year, rather than average, assets are used in all relevant calculations. Beatrice's cost of capital is 0.107.

Question 1: Calculate North division's ROI

Question 2: What is North division's residual income (report in thousands of dollars as a whole number)?

Question 3: Calculate South division's ROI

Question 4: What is South division's residual income (report in thousands of dollars as a whole number)?