Question - Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center).
|
Investment Center
|
Sales
|
Net
Income
|
Average
Invested Assets
|
|
Electronics
|
$10,800,000
|
$409,500
|
$3,150,000
|
|
Sporting goods
|
7,600,000
|
1,044,000
|
5,800,000
|
Compute return on investment for each department.
Assume a target income level of 11.2% of average invested assets. Compute residual income for each department.