chapter_11 - Exercise112(10minutes) 1. Margin= = 2....

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Exercise 11-2  (10 minutes) 1. Net operating income Margin =  Sales $5,400,000  = 30% $18,000,000 2. Sales Turnover =  Average operating assets $18,000,000  = 0.5 $36,000,000 3. ROI = Margin × Turnover = 30% × 0.5 = 15%
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Exercise 11-8  (30 minutes) 1. Computation of ROI. Division A:   $300,000 $6,000,000 ROI =   ×   = 5% × 4 = 20% $6,000,000 $1,500,000 Division B:   $900,000 $10,000,000 ROI =   ×   = 9% × 2 = 18% $10,000,000 $5,000,000 Division C:   $180,000 $8,000,000 ROI =   ×   = 2.25% × 4 = 9% $8,000,000 $2,000,000 2. Division A Division B Division C Average operating assets. ... $1,500,000 $5,000,000 $2,000,000 Required rate of return. ........ ×                15%     ×                18%     ×                12%     Required operating income. . $        225,000     $        900,000     $        240,000     Actual operating income. ..... $  300,000
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This note was uploaded on 11/11/2011 for the course ACC 202 taught by Professor Sue during the Summer '10 term at Michigan State University.

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chapter_11 - Exercise112(10minutes) 1. Margin= = 2....

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