Exercise 4 (ROI, RI, Comparisons of Two Divisions) Cattleya Company has two divisions, A and B, that operate in similar markets. Selected data on the two divisions follow: Division A B Sales. Net operating income Average operating assets. P9,000,000 630,000 3,000,000 P20,000,000 1,800,000 10,000,000

Survey of Accounting (Accounting I)
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Author:Carl Warren
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Chapter14: Decentralized Operations
Section: Chapter Questions
Problem 14.5.2P
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1. Compute the ROI for each division.

2. Assume that the company evaluates performance by use of residual income and that the minimum required return for any division is 16%. Compute the residual income for each division.

Exercise 4 (ROI, RI, Comparisons of Two Divisions)
Cattleya Company has two divisions, A and B, that operate in similar markets.
Selected data on the two divisions follow:
Division
A
Sales.
Net operating income...
Average operating assets.
P9,000,000
630,000
3,000,000
P20,000,000
1,800,000
10,000,000
Transcribed Image Text:Exercise 4 (ROI, RI, Comparisons of Two Divisions) Cattleya Company has two divisions, A and B, that operate in similar markets. Selected data on the two divisions follow: Division A Sales. Net operating income... Average operating assets. P9,000,000 630,000 3,000,000 P20,000,000 1,800,000 10,000,000
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