Selected data from an investment center's accounting records reveal the following:
$$\begin{array} { | l | r | }
\hline \text { Sales } & \$ 700,000 \
\hline \text { Average investment } & \$ 350,000 \
\hline \text { Operating income } & \$ 50,000 \
\hline \text { Minimum rate of return } & 12 \% \
\hline
\end{array}$$ Required:
1.Calculate return on investment (ROI) for this investment center (show separately the two major components of the ROI calculation)
2.Calculate residual income (RI) for this investment center.
Round all computations to two decimal places.

Question

Selected data from an investment center's accounting records reveal the following:
 $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 700,000 \
\hline \text { Average investment } & \$ 350,000 \
\hline \text { Operating income } & \$ 50,000 \
\hline \text { Minimum rate of return } & 12 \% \
\hline
\end{array}$$ Required:
1.Calculate return on investment (ROI) for this investment center (show separately the two major components of the ROI calculation)
2.Calculate residual income (RI) for this investment center.
Round all computations to two decimal places.

Quizplus · Accepted Answer

The Answer of Selected data from an investment center's accounting records reveal the following:
 $$\begin{array} { | l | r | } 
\hline \text { Sales } & \$ 700,000 \
\hline \text { Average investment } & \$ 350,000 \
\hline \text { Operating income } & \$ 50,000 \
\hline \text { Minimum rate of return } & 12 \% \
\hline
\end{array}$$ Required:
1.Calculate return on investment (ROI) for this investment center (show separately the two major components of the ROI calculation)
2.Calculate residual income (RI) for this investment center.
Round all computations to two decimal places.

Selected Data from an Investment Center's Accounting Records Reveal the Following