The Following Information Is Available About the Status and Operations

question 37

Essay

The following information is available about the status and operations for Division B of Tallon Company, which has a minimum required ROI of 20%. Answer each item independently of the others.
$$\begin{array} { l r } & \text { Division B} \\\text { Divisional investment } & \$ 1,500,000 \\\text { Divisional profit } & \$ 550,000 \\\text { Divisional sales } & \$ 3,600,000\end{array}$$
Required:
a. Compute the residual income for Division B.
b. Division B could increase its profit by $25,000 by increasing its investment by $100,000. Compute its new residual income.
c. Division B could increase its profit margin ratio by one percentage point (for example: from 13% to 14%), without increasing total sales or investment. Compute its new residual income. (Round immediate calculations to three decimal places.)
d. Division B could reduce its investment so that its asset turnover increased by one time, while holding total sales and profit constant. Compute its new residual income.

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Definitions:

Pan-Indian Reality

The concept or phenomenon of shared experiences, conditions, or characteristics that are widely applicable across different Indigenous groups in India.

Old Regulation

Old Regulation refers to traditional or outdated rules, laws, or guidelines that govern behavior within societies, organizations, or industries, which may no longer be fully applicable in modern contexts.

Academic Standards

Specific criteria or principles used to measure and evaluate the quality of education, including the attainment of knowledge, skills, and competencies by students.

Discrimination

Unjust or prejudicial treatment of different categories of people or things, especially on the grounds of race, age, or sex.