The Woods and Water Company has two operating divisions

The Woods and Water Company has two operating divisions, the Service Division and the Irrigation Division. The company evaluates the performance of its divisions using the return on investment (ROI) measure. The following information pertains to the two divisions as of the end of the current year:

	Service	Irrigation
	Division	Division	Total
Total operating assets	$400,000	$1,000,000	$1,400,000
Costs:
Direct materials	40,000	400,000	440,000
Direct labor	200,000	200,000	400,000
Overhead	25,000	250,000	275,000
Selling/administrative (S&A) costs	15,000	150,000	165,000
Total costs	$280,000	$1,000,000	$1,280,000

During the year, the Service Division repaired 8,000 units at an average service fee of $50.00 per unit. The Irrigation Division sold 250 units at an average price of $5,000. The company requires a minimum rate of return of 12%.

Required:
Compute the Return on Investment (ROI) measure for both divisions and the company as a whole. Based on ROI alone which division had the better performance? Round ROI measures to the nearest whole percent. Evaluate this company.

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