U.S.Products operates two divisions with the following sales and expense information for the month of May: North Division: Sales $240,000; Operating income $72,000, Operating assets $600,000.
South Division: Sales $160,000; Operating income $80,000, Operating assets $800,000.
U.S.Products expects a minimum return of 10% should be earned from all investments.
North Division's return on investment for May is:
A)10%.
B)12%.
C)20%.
D)30%.

Question

Quizplus · Accepted Answer

North Division's return on investment is calculated as Operating income / Operating assets * 100 = $72,000 / $600,000 * 100 = 12%.

USProducts Operates Two Divisions with the Following Sales and Expense