$$\text { Reference: 12-11 }$$ The Millard Division's Operating Data for the Past Two Years

question 54

Multiple Choice

$$\text { Reference: 12-11 }$$ The Millard Division's operating data for the past two years are provided below: $$\begin{array} { | l | l | l | } \hline & \text { Year 1 } & \text { Year 2 } \\\hline \text { Return on investment } & 12 \% & 36 \% \\\hline \text { Stockholders' equity } & \$ 800,000 & \$ 500,000 \\\hline \text { Net operating income } & ? & \$ 360,000 \\\hline \text { Turnover } & ? & 3 \\\hline \text { Margin } & ? & ? \\\hline \text { Sales } & 3,200,000 & ? \\\hline\end{array}$$ Millard Division's margin in Year 2 was 150% of the margin in Year 1.
-Division B had a ROI last year of 15%. The division's minimum required rate of return is 10%. If the division's average operating assets last year were $450,000, then the division's residual income for last year was?

• A)$37,500.
• B)$22,500.
• C)$45,000.
• D)$67,500.

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