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Alex Chunn Inc. has the following financial data for 2019 for its three regional divisions: Historical Cost Current Cost RegionOperating IncomeNet Book ValueGross Book Value Replacement CostLiquidation Value North Atlantic$65,000 $250,000 $450,000 $990,000 $350,000 Mid Atlantic 40,000 290,000 310,000 380,000 445,000 South Atlantic 30,000 100,000 180,000 650,000 980,000 Required: a. Calculate return on sales (ROS) for each division for 2019. The sales in the North Atlantic, Mid Atlantic, and South Atlantic regions are $2,350,000, $1,450,000, and $500,000, respectively. b. Calculate asset turnover (AT) and return on investment (ROI) for each of the four measures of investment.

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anthougo

The computations of the return on sales, asset turnover, and return on investments are as follows:

a) Return on Sales = Operating Income/Sales x 100

North Atlantic = 2.77% ($65,000/$2,350,000 x 100)

Mid Atlantic = 2.76% ($40,000/$1,450,000 x 100)

South Atlantic = 6% ($30,000/$500,000 x 100)

b1. Asset/Turnover = Sales/Average Asset

                                Net Book      Gross Book     Replacement    Liquidation

North Atlantic               9.4%            5.22%            2.37%               6.71%

Mid Atlantic                  5%                4.68%            3.82%               3.26%

South Atlantic              5%                2.78%            0.77%                0.51%

b2. ROI (%): = Operating Income/Asset Value

                                Net Book      Gross Book     Replacement     Liquidation

North Atlantic               26%             14.44%                6.57%               18.57%

Mid Atlantic                   14%            12.90%               10.53%                 8.99%

South Atlantic              30 %            16.67%                4.62%                  3.06%

Data and Calculations:

Region            Sales           Net Book Gross Book  Replacement  Liquidation

                                                  Value           Value           Cost               Value

North Atlantic $2,350,000 $250,000   $450,000    $990,000    $350,000

Mid Atlantic       1,450,000   290,000       310,000      380,000       445,000

South Atlantic     500,000    100,000       180,000      650,000      980,000

Region            Operating   Net Book Gross Book  Replacement  Liquidation

                          Income            Value           Value           Cost               Value

North Atlantic   $65,000    $250,000   $450,000    $990,000    $350,000

Mid Atlantic        40,000      290,000      310,000      380,000       445,000

South Atlantic    30,000       100,000      180,000      650,000      980,000

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