I Am Mostly Not Sure How To Calculate Average Invested Capital Is It Investment Cap At The End Of The Year

ANE HUDSON is the CEO of ISS Australia, a company that pr
security, catering and maintenance. Hudson says ISS does not outsour
quality staff who deliver innovative solutions and quality servic
contractors. Staff are permanent employees. They receive inducti
assistance and are encouraged to pursue a career in the company.
people across Australia to work in facilities as diverse am
settings. A downturn in the mining sector and the
services returned that total to 15 000 en-
our people are more committed .
has four key values that
spends time tall .
the con
Question 8
(13 marks)
Billings Company is a decentralised wholesaler with two autonomous divisions. The divisions are
evaluated on the basis of return on investment (ROI), with year-end bonuses given to the divisional
managers who have the highest ROIs. Operating results for the company’s two divisions – X and Y
for the most recent year are given below:
op eubraz
142000
Division X
Division Y
Sales
$ 10,500,000
$ 458,000
Cost of goods sold
6,000,000
316,000
Operating expenses
3,200,000
58,000
Invested capital at the beginning of the year
3,000,000
1,200,000
Invested capital at the end of the year
5,000,000
2,000,000
The company had an overall ROI of 15% last year. The company is considering an expansion project
in the upcoming year. The project would be implemented by one of the two divisions. The following
data relate to the project:
Expansion project
Sales
$ 2,000,000
Cost of goods sold
1,200,000
Operating expenses
640,000
Invested capital
1,000,000
Required:
E
Calculate the current ROI of the two divisions. Show your calculations.
(3 marks)
ROT = Profit Before tax
Ave invested cap.
XManagerial Accounting