Question

The income from operations and the amount of invested assets in each division of Beck Industries are as follows:

	Income from Operations		Invested Assets
Retail Division	$103,400		470,000
Commercial Division	53,200		280,000
Internet Division	126,000		700,000

a. Compute the rate of return on investment for each division. (Round to the nearest whole number.)

Division	Percent
Retail Division	%
Commercial Division	%
Internet Division	%

b. Which division is the most profitable per dollar invested?

Answer 1

1. Compute the rate of return on investment for each division. (Round to the nearest whole number.)

Solution;

Rate of Return on Investment = Income from Operations / Invested Assets X 100

After putting the values in formula;

Retail Division;

Rate of Return on Investment = $103,400 / $470,000 X 100 = 22%

Commercial Division;

Rate of Return on Investment = $53,200 / $ 280,000 X 100 = 19%

Internet Division;

Rate of Return on Investment = $126,000 / 700,000 X 100 = 18%

Division	Percent
Retail Division	22%
Commercial Division	19%
Internet Division	18%

1. Which division is the most profitable per dollar invested?

Answer:

As described above that Retails division has highest rate of return on Investment i.e 22% as compare to other division, so “Retail Division” is the most profitable per dollar invested.