Frenchs Forest Publishing Company Has Three Divisions That Operate Autonomously

question 130

Essay

Frenchs Forest Publishing Company has three divisions that operate autonomously.Their results for 2017 are as follows:
$$\begin{array} { | l | r | r | r | } \hline & { \text { Academic } } & { \text { Fiction } } & { \text { Non-fiction } } \\\hline \text { Sales } & \$ 15000000 & \$ 17000000 & \$ 20000000 \\\hline \text { Contribution margin } & 1440000 & 1700000 & 3500000 \\\hline \text { Operating profit } & 1500000 & 1200000 & 2120000 \\\hline \text { Investment base } & 7000000 & 5000000 & 14000000 \\\hline\end{array}$$
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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Definitions:

McMaster University

A public research university located in Hamilton, Ontario, Canada, known for its innovative educational practices.

Facial Features

Distinct attributes or aspects of the human face, such as eyes, nose, and mouth, used in identifying individuals or expressing emotions.

Mere Exposure Effect

A mental occurrence where individuals naturally favor items or concepts they recognize due to repeated exposure.

Self-Fulfilling Prophecy

A prediction that directly or indirectly causes itself to become true due to positive feedback between belief and behavior.