The Following Information Is Available About the Status and Operations

question 133

Essay

The following information is available about the status and operations for Division A of Triplex Company, which has a minimum required ROI of 10%. Answer each item independently of the others.
$$\begin{array} { l r } & \text { Division A } \\\text { Divisional investment } & \$ 100,006 \\\text { Divisional profit } & \$ 17,500 \\\text { Divisional sales } & \$ 200,000\end{array}$$
Required:
a. Compute the residual income for Division A.
b. Division A could increase its profit by $4,000 by increasing its investment by $30,000. Compute its new residual income.
c. 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 residual income.
d. 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 residual income.

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Definitions:

Employer's Willingness

An indication of how open or receptive an employer is to engaging in practices such as negotiations, improvements, or concessions in the workplace.

Closed Shop Arrangements

Employment practices where only members of a labor union can be hired and remain employed.

Open Shop Movement

A movement advocating for workplaces where union membership is not required as a condition of employment, promoting voluntary association.

Employee Rights

The legal entitlements concerning the workplace that employees are guaranteed by law, including the right to fair wages, safe working conditions, and freedom from discrimination and harassment.