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)?