Reference no: EM133174080
Question - Compute the following problems.
Q1. ABC, division of XYZ Manufacturing has assets of Php. 450,000.00 and an operating income of Php. 10,000.00.
a) What is the division's ROI?
b) If the minimum rate of return is 12% what is the division's residual income?
Q2. Consider the following:
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Division A
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Division Z
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Operating assets
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php. 5,000
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php. 12,000
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Operating income
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php. 1,000
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php. 2,250
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ROI
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20%
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18%
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a) Which is the more successful division in terms of ROI?
b) Using 16% as the mimimum required rate of return, compute the residual income for each division. Which division is more successful under this rate?
Q3. The following data are given for the Axe division for 19A:
ROI 25%
Sales Php. 1,200,000
Margin 10%
Minimum required rate of return 18%
a) Compute the division's operating assets.
b) Compute the division's residual income.