1. **Problem 1 – Compute ROI and interpret result:** ROI (Return on Investment) is calculated as $$\text{ROI} = \frac{\text{Operating Income}}{\text{Investment}} \times 100\% = \frac{250000}{1000000} \times 100\% = 25\%$$ This means the company earns 25% return annually on the invested amount. A 25% ROI is generally good; management should consider continuing similar investments if risks and market conditions are stable. 2. **Problem 2 – Calculate Residual Income (RI):** Residual Income formula: $$\text{RI} = \text{Operating Income} - (\text{Required Rate} \times \text{Total Assets}) = 500000 - (0.10 \times 2000000) = 500000 - 200000 = 300000$$ Since RI is positive (₱300,000), Division A exceeded the minimum required return, satisfying performance expectations. 3. **Problem 3 – Suggest KPIs for a hotel chain:** - Customer Satisfaction Score: measures guest happiness; higher scores indicate better experience supporting satisfaction goals. - Average Cost per Occupied Room: helps monitor cost efficiency by tracking expenses associated with rooms served. - Booking Conversion Rate: indicates effectiveness in turning inquiries into reservations, impacting revenue and efficiency. These KPIs provide quantifiable data to evaluate performance against goals. 4. **Problem 4 – Benchmarking inventory turnover:** Possible reasons for lower turnover (6 vs. 8 times): - Overstocking or slow-moving inventory increasing holding periods. - Inefficient sales or marketing reducing inventory movement. Proposed actions: - Optimize inventory levels by forecasting demand better. - Enhance promotions or sales strategies to increase turnover. 5. **Problem 5 – Special order relevant costing:** Calculate contribution per unit: $$\text{Price} - \text{Variable Cost} = 250 - 220 = 30$$ Total contribution for 500 units: $$30 \times 500 = 15000$$ Fixed costs do not change, so they are irrelevant. Since the special order yields a positive contribution of 15000, accepting the order increases profit. Thus, the company should accept the special order.