Stevens Company Has Two Divisions That Report on a Decentralized

question 5

Essay

Stevens Company has two divisions that report on a decentralized basis.Their results for the current year were as follows:
$$\begin{array} { l c c } & \text { Halmet } & \text { Ball } \\\text { Sales } & \$ 150,000 & \$ 300,000 \\\text { Income } & \$ 15,000 & \$ 45,000 \\\text { Asset base } & \$ 7,000 & \$ 150,000 \\\text { Weighted average cost of capital }& 12 \% & 12 \%\end{array}$$ Compute the following amounts for each division:
a.Return on investment (ROI)if the desired rate of return is 12 percent.
b.Residual income if the desired rate of return is 20 percent.
c.EVA.
d.Turnover.
e.Margin for each division.