Compute the residual income for each division

Question

Task: Selected sales and operating data for three division of three different companies are given below:

                                                   Division X      Division Y      Division Z
Sales                                           $900,000       $750,000        $600,000
Average operating assets              $600,000       $150,000        $200,000
Net operating income                     $ 54,000       $ 30,000        $ 10,000
Minimum required rate of return         10%            16%                8%

Q1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. Show computations.

Q2. Compute the residual income for each division. Show computations.

Q3. Under which of these methods would they accept an opportunity with a 15 percent return. Show computations and details.