1. If Department B is able to reduce its operating assets by $100,000. Department B's new ROI would be? 2. If Department A is able to increase its controllable margin by $60,000 as a result of reducing variable costs, Department A's new ROI would be?
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1. If Department B is able to reduce its operating assets by $100,000. Department B's new
2. If Department A is able to increase its controllable margin by $60,000 as a result of reducing variable costs, Department A's new ROI would be?
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- Company BCD has two departments where Net Income, Assets and Return on Investment (ROI) is tracked. Compute ROI. Net Income Average Assets ROI Dept A $350,000 $900,000 ____________ Dept B $100,000 $550,000 ____________ The company is implementing a target income of 10% of average assets. Compute the target income and residual income (loss) for each department. Net Income Average Assets Target Income Residual Income (Loss) Dept A $350,000 $900,000 ____________ ____________ Dept B $100,000 $550,000 ____________ ____________ please dont provide answer in an image format thank youFor its three investment centers, Gerrard Company accumulates the following data: I II III Sales $2,000,000 $4,000,000 $4,000,000 Controllable margin 1,400,000 2,000,000 3,600,000 Average operating assets 5,000,000 8,000,000 10,000,000 Compute the return on investment (ROI) for each center. I II III The return on investment enter percentages % enter percentages % enter percentages %The following results are available for Division X and Y:Division X Division YProfit before interest and tax P185 000 P172, 000Capital employed P1, 540, 000 P1, 650, 000The cost of capital is 10%.Calculate and comment on the performance of the departments based on:a. Return on capital employed (4 marks)b. Residual incom
- Selected data from an investment center of IROL Inc. follow:Sales $8,000,000Net book value of assets, beginning 2,500,000Net book value of assets, ending 2,600,000Net operating income 640,000Minimum rate of return 12%Required1. Calculate return on sales (ROS), asset turnover (AT), and return on investment (ROI).2. Calculate residual income (RI).(J) Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division ADivision BDivision CSales$ 12,120,000$ 28,120,000$ 20,120,000Average operating assets$ 3,030,000$ 7,030,000$ 5,030,000Net operating income$ 496,920$ 449,920$ 503,000Minimum required rate of return7.00%7.50%10.00%Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunityFor its three investment centers, Gerrard Company accumulates the following data: I II III Sales $2,062,000 $3,914,000 $3,905,000 Controllable margin 848,640 2,161,620 4,103,120 Average operating assets 4,992,000 8,006,000 12,068,000 Compute the return on investment (ROI) for each center. I II III The return on investment % % % eTextbook and Media
- DATA FOR TOWER HILL DIVISION Revenue 10, 000Fixed Asset:Purchases by division 500Purchases by Head Office 2,500Direct Material and Labour Costs (variable) 6,000Indirect Labour (Consolidate fixed overhead) 1000Divisional Manager’s Salary 400Apportioned Head Office Costs 600Depreciation on fixed assets 20%Company’s cost of capital 10%Assuming that fixed assets comprise the total investment in Tower Hill Division. You are required to determine the following:(i). Variables(ii). Controllable profit (iii). Direct profit (iv). Controllable residual profit (v). Net residual profitThe following are available for divison X and Y Profit before interest and tax X 185 000 Y172 000 Capital employed X 1 540 000 Y 1 650 000 The cost of capital is 10% comment on the performance of the departments based on a. Return on capital employed b.residual incomeProvide the missing data in the following tabulation: Division Alpha Bravo Charlie Revenue 11500000 Operating profit 920000 210000 Average operating assets 800000 Margin 4,00% 7,00% Turnover 5 Return on investment (ROI) 20% 14%
- For its three investment centres, Stahl Company accumulates the following data: Centre I Centre II Centre III Sales $1,971,600 $4,003,000 $3,944,000 Controllable margin 788,640 2,346,970 3,643,800 Average operating assets 4,929,000 8,093,000 12,146,000 The centres expect the following changes in the next year: Centre I a 20% increase in sales; Centre II a $323,720 decrease in costs; and Centre III a $485,840 decrease in average operating assets.Calculate the expected return on investment for each centre. Assume Centre I has a contribution margin percentage of 80%. (Round ROI to 2 decimal places, e.g. 1.57%.) Centre I Centre II Centre III The expected return on investment % % %Profit center responsibility reporting On-Demand Sports Co. operates two divisions—the Action Sports Division and the Team Sports Division. The following income and expense accounts were provided as of November 30. 20Y1, the end of the current fiscal year, after all adjustments, including those for inventories, were recorded The bases to be used in allocating expenses, together with other essential information, are as follows a.Advertising expense—incurred al headquarters, charged back to divisions on the basis of usage: Action Sports Division. $1,200,000; Team Sports Division, $1,800,000. b. Transportation expense—charged hack lo divisions at a charge rale of $18.50 per bill of lading: Action Sports Division, 14.000 bills of lading; Team Sports Division. 21.400 bills of lading. C. Accounts receivable collection expense—incurred al headquarters, charged back to divisions at a charge rate of $9-00 per invoice: Action Sports Division. 32.000 sales invoices; Team Sports Division, 12.500 sales invoices. d. Warehouse expense—charged back to divisions on the basis of floor space used in storing division products: Action Sports Division. 120.000 square feet; Team Sports Division. 80.000 square feet. Prepare divisional income statements with two column headings: Action Sports Division and Team Sports Division. Provide supporting schedules for determining service department charges.Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last years results: Washingtons actual cost of capital was 12%. Exercise 11-31 Economic Value Added Refer to the information for Washington Company above. Required: 1. Calculate the EVA for the Adams Division. 2. Calculate the EVA for the Jefferson Division. 3. CONCEPTUAL CONNECTION Is each division creating or destroying wealth? 4. CONCEPTUAL CONNECTION Describe generally the types of actions that Washingtons management team could take to increase Jefferson Divisions EVA?
