Use the Following Information to Answer Question Hays Company Has Set a Target Return on Investment (ROI)

Essay

Use the following information to answer Question. Renfro Company has two divisions, the Restaurants Division and the Commissary Division. The following information was gathered for the two divisions in 2012: $$\begin{array} { | l | l | l | } \hline & \begin{array} { l } \text { Restaurants } \\\text { Division }\end{array} & \begin{array} { l } \text { Commissary } \\\text { Division }\end{array} \\\hline \text { Operating Income } & \$ 4,000,000 & \$ 1,500,000 \\\hline \text { Operating Assets } & \$ 30,000,000 & \$ 10,500,000 \\\hline\end{array}$$
Hays Company has set a target return on investment (ROI) of 12% for both divisions.
Calculate residual income (RI) for the Restaurants Division and the Commissary Division. Based on RI, which division appears to have performed better?