Question: Milano Corporation has three operating divisions and requires a 12 percent return on all investments. Selected information is presented here:
Divison 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] Compute the missing amounts for each division
[B] Make comment on the relative performance of each division
[C] Give some example to show how residual income improves decision making at the divisional level