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

Question

Quizplus · Accepted Answer

The average operating assets for Division Z can be calculated using the formula for Return on Investment (ROI), which is ROI = Net Operating Income / Average Operating Assets. Given that Division Z has an ROI of 15% and a Net Operating Income of $75,000, we can rearrange the formula to solve for Average Operating Assets: Average Operating Assets = Net Operating Income / ROI = $75,000 / 0.15 = $500,000.

The Following Information Pertains to the Three Divisions of Marlow