Nantucket Company Has Two Divisions That Report on a Decentralized

Essay

Nantucket Company has two divisions that report on a decentralized basis. Their results for 2018 were as follows: $\begin{array}{lrr}&\text { Helmet } &\text { Ball }\\ \text {Sales }&\$ 150,000 & \$ 300,000 \\ \text {Income }&\$ 15,000 & \$ 45,000 \\ \text {Asset base }&\$ 75,000 & \$ 150,000 \\ \text {Weighted average cost of capital }&12 \% & 12 \%\end{array}$
Required:
Compute the following amounts for each division:
a.Return on investment (ROI).
b.Residual income if the desired rate of return is 20 percent.
c.EVA.
d.Turnover.
e.Margin for each division.