Zurich Corporation

Investment center analisys; ROI and residual income.  Zurich Corporation has three operating divisions and requires a 12% return
on all investments. Selected information is present below:—–

Division X         Division Y       Division Z
Revenues ……………………$ 1,000,000             ?                             ?
Operating income……………$    120,000             ?                 $   100,000
Operating assets ……………  $    500,000        $  300,000                ?
Margin ………………………     ?                         12%                      ?
Turnover ………………………    ?                        1 turn                2 turns
ROI ……………………………    ?                            ?                      ?
Residual income ……………….    ?                            ?               $  25,000

Required:
a. Calculate the missing amounts for each division—–
b.  Comment on the relative performance of each division—–
c.  Provide and example to show how residual income improves decision making at the divisonal  level