Question

Check my work Check My Work button is now enabledItem 3Item 3 2.5 points Selected operating data for two divisions of Outback Brewing, Ltd., of Australia are given below: Division Queensland New South Wales Sales $ 1,296,000 $ 2,655,000 Average operating assets $ 540,000 $ 590,000 Net operating income $ 129,600 $ 185,850 Property, plant, and equipment (net) $ 254,000 $ 204,000 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?

Answer 1

D Ans: Queensland Margin - met operating income Sales 129,600 = 10% 1,296,000 Turnover = sales 1,296,000 averale content = 296,000 average operating assets 540,000 24 ROI = = margin x turnover 10% X 2.4 = 24% New South Wales Margin = – 185,850 _ 2,655, 000 = net operating income sales 7% Tumover = 2,655,000 590,000 Sales average operating assets margin x turnover 7% x 4.5 = 31.5% ROI = = New South Wales division is doing a better job as it has Higher Turnover and Higher ROI.

2) New South Wales division is doing a better job as it has Higher Turnover and Higher ROI

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