Fundamentals of Cost Accounting 2nd Edition by William Lanen, Carolyn Wells, Michael Maher

Exercise 22

Compare ROI Using Net Book and Gross Book Values
Refer to the data in Exercise 14-26. Assume that the division uses beginning-of-year asset values in the denominator for computing ROI.
Required
a. Compute ROI, using net book value.
b. Compute ROI, using gross book value.
c. If you worked Exercise 14-26, compare those results with those in this exercise. How different is the ROI computed using end-of-year asset values, as in Exercise 14-26, from the ROI using beginning-of-year values in this exercise