Answer:
1. Quuen Land Division
Margin 6.50%
ROI 11.70%
New South Wale Division Margin
Margin 3.50%
ROI 15.75%
2. New South wale Division
Explanation:
1. Computation for each division's margin, turnover, and return on investment (ROI)
QUUEN LAND DIVISION MARGIN
Using this formula
Margin =Net operating income/Total Sales
Let plug in the formula
Margin =$70,200/ $ 1,080,000
Margin=6.50%
QUUEN LAND DIVISION ROI
First step is to determine the Turnover using this formula
Turnover=Total sales/Average Asset
Let plug in the formula
Turnover= $ 1,080,000 /$600,000
Turnover =1.8 times
Now let determine the ROI using this formula
ROI =Margin * Turnover
Let plug in the formula
ROI=6.50%*1.8
ROI=11.70%
NEW SOUTH WALE DIVISION MARGIN
Margin =$ 83,475 / $ 2,385,000
Margin=3.5%
NEW SOUTH WALE DIVISION ROI
First step is to determine the Turnover using this formula
Turnover=Total sales/Average Asset
Let plug in the formula
Turnover= $ 2,385,000 /$530,000
Turnover =4.5 times
Now let determine the ROI using this formula
ROI =Margin * Turnover
Let plug in the formula
ROI=3.5%*4.5
RO1=15.75%
2. Based on the above calculation the divisional manager that seems to be doing the better job
Is NEW SOUTH WALE DIVISION because the ROI is greater.
