Chapter 12 cont - Bus 215 Section 8 November 14, 2010...

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Bus 215 Section 8 November 14, 2010 Homework Assignment: Chapter 12 Continued E12-5) 1. For the Osaka division: the ROI is 210,000/1,000,000 = 0.21 = 21% For the Yokohama division: the ROI is 720,000/4,000,0000 = 0.18 = 18% 2. For the Osaka division: the residual income is 210,000 – (1,000,000 x .15) = 60,000 For the Yokohama division: the residual income is 720,000 – (4,000,000 - .15) = 120,000 3. No, larger divisions often have more residual income than small divisions, not necessarily because they are better managed but simply because they are bigger. Yokohama could simply be a bigger division than Osaka. E12-9) 1. The club’s return on investment (ROI) is 70,000/350,000 = 0.2 2. With the increase on sales and operating income, the clubs ROI would be 88,200/350,000 = . 252 = 25% 3. With a decrease in expenses, the clubs ROI would be 56,000/350,000 = .16 = 16% 4. With a reduction to operating assets, the club’s ROI would be 70,000/1,400,00 = .25 = 25% E12-14) Medical Market: Increased Sales
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Chapter 12 cont - Bus 215 Section 8 November 14, 2010...

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