The Water Management Company has two operating divisions, the Service Division and the Irrigation Division. The company evaluates the performance of its divisions using the return on investment (ROI) measure. The following information pertains to the two divisions as of the end of the current year.
The average service fee was $50.00 per unit for the Service Division, while the average selling price of an irrigation system was $5,000 for the Irrigation Division. The company requires a minimum return on investment of 12%.
Required:Compute the return on investment (ROI) measure for both divisions and the company as a whole. Based on ROI alone which division had the better performance? (Round ROI measures to the nearest whole percent.)
Definitions:
Operation of Partnerships
The way in which partnerships are managed and governed, detailing the roles, responsibilities, and profit-sharing among partners.
Different Agreement
Refers to an alternate or varied contractual arrangement distinct from an original or previous one.
Managing Partner
An owner of a partnership who has the authority and responsibility to manage the day-to-day operations of the business.
Partnership Business
A business structure in which two or more individuals manage and operate a business in accordance with the terms and objectives set out in a Partnership Agreement.
Q3: Which of the following would appear in
Q20: Bright Minds expects to collect 70%
Q27: The goal in allocating a cost to
Q33: The concept that says managers should be
Q67: A cost pool should be made up
Q73: Blankenship Company operates a factory with two
Q98: Interest expense is not included in the
Q118: Alleghany Community College operates four departments.
Q126: The following are Acme's production costs
Q166: Michael & Co. expects overhead costs