The Augment Manufacturing Company Has Three Divisions: X Division, Y

question 142

Essay

The Augment Manufacturing Company has three divisions: X Division, Y Division, and Z Division. Operating results for the three divisions for last year were as follows:
$\begin{array}{c}\begin{array}{lrr} \text { Residual income } &\\ \text { Net operating income } &\\ \text {Average operating asset: } &\\ \text { Sales } &\\ \text { Profit margin } &\\\end{array}\begin{array}{ccc}\text { Division } \mathrm{X} & \text { Division Y } & \text { Division Z } \\\$ 98,400& \$27,200 &\$ 12,000 \\188,600 & 115,600& 76,000 \\ 820,000 & 680,000 & 400,000 \\ 1,640,000 & 1,445,000 & 1,040,000 \\ 11.5 \% & 8.0 \% & 5 .0\% \\\end{array}\end{array}$

Required:
a. What is the ROI for each of the three divisions?
b. What is the cost of capital for each of the three divisions?

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Definitions:

Automobile Accidents

are unexpected events involving motor vehicles that result in damage, injury, or death, often requiring legal and insurance considerations.

Sudden Infant Death Syndrome (SIDS)

An unexplained and sudden death of a seemingly healthy infant, usually during sleep, in the first year of life.

Heartbeat

The rhythmic contraction and expansion of the heart, which pumps blood throughout the body.

Clinical Death

The cessation of blood circulation and breathing, often considered as a medical criterion for death.