Reference: 12-06
the Baily Division Recorded Operating Data as Follows

Multiple Choice

Reference: 12-06
The Baily Division recorded operating data as follows for the past two years: $$\begin{array} { | l | l | l | } \hline & \text { Year 1 } & \text { Year 2 } \\\hline \text { Sales } & ? & \$ 1,200,000 \\\hline \text { Stockholders' equity } & \$ 540,000 & 720,000 \\\hline \text { Average operating assets } & \$ 600,000 & ? \\\hline \text { Margin } & 15 \% & ? \\\hline \text { Return on investment } & 22.5 \% & 18 \% \\\hline\end{array}$$ Baily Division's turnover was exactly the same in both Year 1 and Year 2.
-Sales and average operating assets for Company P and Company Q are given below: $$\begin{array} { | l | l | l | } \hline & \text { Sales } & \text { Average Operating Assets } \\\hline \text { Company P } & \$ 20,000 & \$ 8,000 \\\hline \text { Company Q } & \$ 50,000 & \$ 10,000 \\\hline\end{array}$$ What is the margin that each company will have to earn in order to generate a return on investment of 20%?

A) 12% and 16%.
B) 8% and 4%.
C) 2.5% and 5%.
D) 50% and 100%.