Answer:
(a)average assets lager1,250,000
(b) minimun RoR lager=0.08 = 8%
(c) 336,000 controllable margin lite lager
(d) 28% RoI lie lager
Explanation:
<u>Lager</u>
CM 500,000
Controllable Margin 200,000
Average Operating assets: 1,250,000(a)
(a)ROI = 16% = 200,000/assets = 0.16 = 1,250,000
Minimun RoR (b) 8%
Residual Income : Operating Income - operating Income at minimun return
Residual Income: Operating income - Assets x minimun return
100,000 = 200,000 - 1,250,000 x rate
rate = 100,000/1,250,000 = 0.08
<u>Lite Lager</u>
CM 300,000
Average operating Assets 1,200,000 = the amount invested by Samber Brewing in this divisio. This is the amount we use to determinate the ROI
Minimun rate of return 11%
Retun on Investment .28%
Residual Income 204,000
Residual Income : Operating Income - operating Income at minimun return
Residual Income: Operating income - Assets x minimun return
204,000 = Operating Income - 1,200,000 x 0.11
204,000 + 132,000 = Operating Income
336,000 = Operating Income = controllable margin
Return on Investment = operating income/investment of Samberg Brewing
336,000/1,200,000 = 0.28
