The Water Management Company Has Two Operating Divisions,the Service Division

question 19

Essay

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. $\begin{array}{|l|r|r|r|}\hline&\underline {\text { Service }} &\underline { \text { Imigation } }& \\\hline& \underline {\text { Division }} & \underline {\text { Division }} & \underline {\text { Total }}\\\hline \text {Units repaired; Units produced and sold } &8,000&250\\\hline \text {Level of investment in operating assets} &400,000 & \$ 1,000,000 & \$ 1,400,000 \\\hline & & \\\hline \text {Expenses: } && & \\\hline \text {Direct materials} &40,000 & 400,000 & 440,000 \\\hline \text {Direct labor} &200,000 & 200,000 & 400,000 \\\hline \text { Overhead } &25,000 & 250,000 & 275,000 \\\hline \text {Selling/administrative (S\&A) costs } &\underline {15,000} & \underline {150,000} & \underline {165,000} \\\hline \text {Total Expenses } &\$ 280,000& \$ 1,000,000 & \$ 1,280,000\\\hline \end{array}$ 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. )

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Definitions:

Dramaturgical Analysis

A sociological perspective introduced by Erving Goffman, which likens social interaction to performing on a stage, where individuals manage impressions in front of others.

Double Consciousness

A concept referring to the bifurcated consciousness that African Americans and other marginalized groups navigate, dealing with their own identity and the perceptions imposed by a prejudiced society.

The Looking Glass Self

A sociological concept that people develop their self-image partially based on how they believe others perceive them.

Sympathetic Introspection

A method in social science whereby researchers strive to understand the experiences and motivations of others by vicariously participating in their emotional experiences.