Huston Company,a manufacturer of office supplies,provides the following financial information: $$\begin{array} { | l | r | r | }
\hline & \text { Pen Division } & \text { Pencil Division } \
\hline \text { Operating income } & \$ 90,000 & \$ 30,000 \
\hline \text { Net sales } & \$ 450,000 & \$ 150,000 \
\hline \text { Total assets at Jan. 1 } & \$ 580,000 & \$ 255,000 \
\hline \text { Total assets at Dec. 31 } & \$ 600,000 & \$ 235,000 \
\hline
\end{array}$$ Calculate the return on investment for the Pen Division.(Round your answer to two decimal places.)

Question

Huston Company,a manufacturer of office supplies,provides the following financial information: $$\begin{array} { | l | r | r | } 
\hline & \text { Pen Division } & \text { Pencil Division } \
\hline \text { Operating income } & \$ 90,000 & \$ 30,000 \
\hline \text { Net sales } & \$ 450,000 & \$ 150,000 \
\hline \text { Total assets at Jan. 1 } & \$ 580,000 & \$ 255,000 \
\hline \text { Total assets at Dec. 31 } & \$ 600,000 & \$ 235,000 \
\hline
\end{array}$$ Calculate the return on investment for the Pen Division.(Round your answer to two decimal places.)

Quizplus · Accepted Answer

The return on investment (ROI) for the Pen Division is calculated as follows:ROI = Operating income / Average total assetsAverage total assets = (Total assets at Jan. 1 + Total assets at Dec. 31) / 2= ($580,000 + $600,000) / 2= $590,000ROI = $90,000 / $590,000= 15.25%Therefore, the correct answer is A: 15.25%.

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