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Recreation Equipment Company Has Several Divisions That Are Investment Centers

question 116

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Recreation Equipment Company has several divisions that are investment centers. Data for the Boat Division and the Trailer Division are shown here:
 Boat Division  Trailer Division  Operating income $90,000$36,000 Total assets at Jan 1 $670,000$230,000 Total assets at Dec 31$710,000$220,000\begin{array} { | l | c | c | } \hline & \text { Boat Division } & \text { Trailer Division } \\\hline \text { Operating income } & \$ 90,000 & \$ 36,000 \\\hline \text { Total assets at Jan 1 } & \$ 670,000 & \$ 230,000 \\\hline \text { Total assets at Dec } 31 & \$ 710,000 & \$ 220,000 \\\hline\end{array} With regard to the efficient use of assets, the Boat Division has a higher ROI (Return on Investment) because it has the highest operating income.


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