Provisions Company,a manufacturer of office supplies,provides the following financial information: $$\begin{array} { | l | r | r | }
\hline & \text { Pen Division } & \text { Pencil Division } \
\hline \text { Operating income } & \$ 100,000 & \$ 40,000 \
\hline \text { Net sales } & \$ 500,000 & \$ 150,000 \
\hline \text { Total assets at Jan. 1 } & \$ 580,000 & \$ 350,000 \
\hline \text { Total assets at Dec. 31 } & \$ 610,000 & \$ 300,000 \
\hline
\end{array}$$ Calculate the return on investment for the Pen Division.(Round your answer to two decimal places.)

Question

Provisions Company,a manufacturer of office supplies,provides the following financial information: $$\begin{array} { | l | r | r | } 
\hline & \text { Pen Division } & \text { Pencil Division } \
\hline \text { Operating income } & \$ 100,000 & \$ 40,000 \
\hline \text { Net sales } & \$ 500,000 & \$ 150,000 \
\hline \text { Total assets at Jan. 1 } & \$ 580,000 & \$ 350,000 \
\hline \text { Total assets at Dec. 31 } & \$ 610,000 & \$ 300,000 \
\hline
\end{array}$$ Calculate the return on investment for the Pen Division.(Round your answer to two decimal places.)

Quizplus · Accepted Answer

Return on investment = Operating income / Average total assetsAverage total assets = (Total assets at Jan. 1 + Total assets at Dec. 31) / 2For Pen Division:Average total assets = (580,000 + 610,000) / 2 = 595,000Return on investment = 100,000 / 595,000 = 16.81%

Provisions Company,a Manufacturer of Office Supplies,provides the Following Financial Information