Information for Two Divisions of Superb Entertainment Company Is Given

Essay

Information for two divisions of Superb Entertainment Company is given below:
\begin{array}{ll}&\underline{\text { Compact Disc } } &\underline{\text { DVD }} \\\text { Net income } & \$ 60,00 &\$100,000 \\\text {Capital investment } & \$400,000& \$500,000\\\\end{array}
a. If Superb Entertaiment Company charges each division $12 \%$ for capital employed, compute resudual income for the Compact Disc and DVD divisions.

b. Compute the ROI for each division.