The Following Information Is Available About the Status and Operations

question 118

Essay

The following information is available about the status and operations for Division A of Abad Company, which has a minimum required ROI of 20%. Answer each item independently of the others.
$$\begin{array} { l r } & \text { Division A } \\\text { Divisional investment } & \$ 100,000 \\\text { Divisional profit } & \$ 35,000 \\\text { Divisional sales } & \$ 200,000\end{array}$$
Required:
a. Compute the ROI for Division A.
b. Compute the residual income for Division A.
c. Division A could increase its profit by $8,000 by increasing its investment by $30,000. Compute its total residual income.
d. Division A could increase its profit margin ratio by one percentage point (for example: from 12% to 13%), without increasing total sales or investment. Compute its new ROI.
e. Division A could reduce its investment so that its asset turnover increased by one time, while holding total sales and profit constant. Compute its new ROI.

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Definitions:

Gender Differences

Variations in characteristics, expressions, roles, and behaviors typically associated with being male or female.

Unipolar Depression

A mood disorder characterized by persistent sadness, lack of interest in activities, and other symptoms, without the manic episodes seen in bipolar disorder.

Unipolar Depression

A major depressive disorder characterized by a persistent feeling of sadness or a lack of interest in external stimuli, without the mood swings of bipolar disorder.

Normal Mood Fluctuation

The typical variation in a person's mood over time, which is considered a standard aspect of emotional life.