Batman Abstract Company Has Three Divisions That Operate Autonomously The Company's Desired Rate of Return Is 20

question 29

Essay

Batman Abstract Company has three divisions that operate autonomously.Their results for 2017 are as follows:
$$\begin{array} { | l | r | r | r | } \hline &{ \text { Riddler } } & { \text { Joker } } & { \text { Penguin } } \\\hline \text { Sales } & \$ 5000000 & \$ 7000000 & \$ 10000000 \\\hline \text { Contribution margin } & 1440000 & 1700000 & 3500000 \\\hline \text { Operating profit } & 1000000 & 1750000 & 2520000 \\\hline \text { Investment base } & 9000000 & 10000000 & 14000000 \\\hline\end{array}$$
The company's desired rate of return is 20%.
Required:
a.Calculate each division's ROI.
b.Calculate each division's residual income.
c.Rank each division by both ROI and residual income.
d.Which division had the best performance in 2017? Why?
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