The following information pertains to the three divisions of Merrymount Company: $\begin{array}{lrrr}&\text { Division } X& \text { Division } Y& \text { Division } Z\
\text { Sales } & ? & ? & 1,250,000 \
\text { Net operating income } & \$ 36,000 & \$ 25,000 & \$ 7,000 \
\text { Average operating assets } & 300,000 & ? & ? \
\text { Retum on investment } & ? & 20 \% & 15 \% \
\text { Margin } & 0.10 & 0.05 & ? \
\text { Turnover } & 1.5 & ? & ? \
\text { Target ROI } & 15 \% & 12 \% & 10 \%
\end{array}$ What are the average operating assets for Division Z?
A)$75,000
B)$500,000
C)$1,250,000
D)$187,500

Question

Quizplus · Accepted Answer

The return on investment (ROI) for Division Z is 15%, and the net operating income is $7,000. Using the formula ROI = Net Operating Income / Average Operating Assets, we can solve for the average operating assets: $7,000 / Average Operating Assets = 0.15, which gives Average Operating Assets = $7,000 / 0.15 = $46,666.67. However, this does not match any of the options, indicating a possible error in the problem setup or options.

The Following Information Pertains to the Three Divisions of Merrymount