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Compute the rate of return for each division

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Question - Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below (the currency is the Australian dollar, denoted here as $):

Division New South Queensland Wales

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $4,000,000 $7,000,000

Average operating assets . . . . . . . . . . . . . . . . $2,000,000 $2,000,000

Net operating income . . . . . . . . . . . . . . . . . . . $360,000 $420,000

Property, plant, and equipment (net) . . . . . . . . $950,000 $800,000

Required:

1. Compute the rate of return for each division using the return on investment (ROI) formula stated in terms of margin and turnover.

2. Which divisional manager seems to be doing the better job? Why?

Reference no: EM131789870

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