Calculate the missing amounts for each division

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Reference no: EM1313080

DuPont performance analysis and Residual Income analysis.

Milano Corporation has three operating divisions and requires a 12% return on all investments. Selected information is presented here.


Division A

Division B

Division C

Revenues...................

 500,000

?

?

Operating Income.........

$      60,000

?

$     80,000

Operating Assets............

$    250,000

$   600,000

?

Margin __________________

?

12%

?

Turnover _______________

?

1 turn

2 turns

ROI _____________________

?

?

?

Residual income

?

?

$ 20, 000

Required:

a. Calculate the missing amounts for each division.

b. Comment on the relative performance of each division.

c. Provide an example to show how residual income improves decision making at the divisional level.

a

 DuPont Performance Analysis: 

Division A

Division B

Division C

Revenues.......................................... 

$500,000

 

 

Operating Income................................ 

$60,000

 

$80,000

Operating Assets................................. 

$250,000

$600,000

 

Margin...........................nbsp;

 

12%

 

Turnover ........................... 

 

1 turn 

2 turns 

ROI ........................... 

 

 

 

Residual Income Analysis:

 

 

 

Operating Income................................

$60,000

 

$80,000

Required ROI (Operating assets x 12%).....

30,000

72,000

 

Residual Income..................................

 

 

$20,000

b.--------------

c.--------------

Reference no: EM1313080

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