Selected Data for Two Divisions of the Royal Company Are

Selected data for two divisions of the Royal Company are given below:
$\begin{array}{ll}&\text { South } & \text { North } \\&\text { Division } & \text { Division }\\ \text {Net sales for year }&\$ 4,000,000 & \$ 7,000,000 \\ \text {Average total assets for year }&\$ 2,000,000 & \$ 2,000,000 \\ \text { Operating income before taxes for year}&\$ 360,000 & \$ 420,000 \\ \text {Tax rate }&20 \% & 20 \% \\ \text {Average after-tax cost of capital }&10 \% & 12 \%\end{array}$
Required:
A) Compute the ROI for each division. Income is defined as operating income after taxes.
B) Based on the ROI, which division manager should receive a bonus? Bonuses are awarded if ROI equals or exceeds 15 percent.
C) Compute the residual income for each division. Invested capital is defined as total assets.
D) Based on the residual income, which division manager should receive a bonus? Bonuses are awarded if residual income is greater than $100,000.