Win Company has the following data: $$\begin{array} { l r r }
& \text { Division A } & \text { Division B } \
\text { Sales } & \$ 400,000 & \$ 300,000 \
\text { Contribution margin } & 160,000 & 125,000 \
\text { Operating income } & 80,000 & 30,000 \
\text { Average operating assets } & 320,000 & 200,000 \
\text { Cost of capital } & 15 \% & 15 \%
\end{array}$$ Dixie Company has a target ROI of 20%.
Required: Calculate the following amounts for each division: A. Margin ratio
B. Turnover ratio
C. ROI
D. Residual income
E. EVA

Question

Win Company has the following data: $$\begin{array} { l r r } 
& \text { Division A } & \text { Division B } \
\text { Sales } & \$ 400,000 & \$ 300,000 \
\text { Contribution margin } & 160,000 & 125,000 \
\text { Operating income } & 80,000 & 30,000 \
\text { Average operating assets } & 320,000 & 200,000 \
\text { Cost of capital } & 15 \% & 15 \%
\end{array}$$ Dixie Company has a target ROI of 20%.
Required: Calculate the following amounts for each division: A. Margin ratio
B. Turnover ratio
C. ROI
D. Residual income
E. EVA

Quizplus · Accepted Answer

The Answer of Win Company has the following data: $$\begin{array} { l r r } 
& \text { Division A } & \text { Division B } \
\text { Sales } & \$ 400,000 & \$ 300,000 \
\text { Contribution margin } & 160,000 & 125,000 \
\text { Operating income } & 80,000 & 30,000 \
\text { Average operating assets } & 320,000 & 200,000 \
\text { Cost of capital } & 15 \% & 15 \%
\end{array}$$ Dixie Company has a target ROI of 20%.
Required: Calculate the following amounts for each division: A. Margin ratio
B. Turnover ratio
C. ROI
D. Residual income
E. EVA

Win Company Has the Following Data Dixie Company Has a Target ROI of 20