4. The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Division Income from Operations Invested Assets Retail Division $5,500,000 $30,000,000 Commercial Division 6,750,000 23,000,000 Internet Division 1,500,000 12,000,000 a. Compute the return on investment for each division. b. Which division is the most profitable per dollar invested?

4. The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Division Income from Operations Invested Assets Retail Division $5,500,000 $30,000,000 Commercial Division 6,750,000 23,000,000 Internet Division 1,500,000 12,000,000 a. Compute the return on investment for each division. b. Which division is the most profitable per dollar invested?

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 10E

See similar textbooks

Similar questions

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?
Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of $30,000, and invested assets of $600000. What is the return on investment for Division A? A. 20% B. 25% C. 33% D. 40%
Communication The Norse Division of Gridiron Concepts Inc. experienced significant revenue and profit growth from 20Y4 to 20Y6 as shown in the following divisional income statements: There are no support department allocations, and the division operates as an investment center that must maintain a 15% return on invested assets. Determine the profit margin, investment turnover, and return on investment for the Norse Division for 20Y420Y6. Based on your computations, write a brief memo to the president of Gridiron Concepts Inc., Knute Holz, evaluating the divisions performance.
The condensed income statement for the Consumer Products Division of Tri-State Industries Inc. is as follows (assuming no support department allocations): The manager of the Consumer Products Division is considering ways to increase the return on investment. a. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment of the Consumer Products Division, assuming that 143,750,000 of assets have been invested in the Consumer Products Division. b. If expenses could be reduced by 3,450,000 without decreasing sales, what would be the impact on the profit margin, investment turnover, and return on investment for the Consumer Products Division?
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 11-32 Residual Income Refer to the information for Washington Company above. In addition, Washington Companys top management has set a minimum acceptable rate of return equal to 8%. Required: 1. Calculate the residual income for the Adams Division. 2. Calculate the residual income for the Jefferson Division.
A multinational corporation has a number of divisions, two of which are the North American Division and the Pacific Rim Division. Data on the two divisions are as follows: Round all rates of return to four significant digits. Required: 1. Compute residual income for each division. By comparing residual income, is it possible to make a useful comparison of divisional performance? Explain. 2. Compute the residual rate of return by dividing the residual income by the average operating assets. Is it possible now to say that one division outperformed the other? Explain. 3. Compute the return on investment for each division. Can we make meaningful comparisons of divisional performance? Explain. 4. Add the residual rate of return computed in Requirement 2 to the required rate of return. Compare these rates with the ROI computed in Requirement 3. Will this relationship always be the same?
The three divisions of Yummy Foods are Snack Goods, Cereal, and Frozen Foods. The divisions are structured as investment centers. The following responsibility reports were prepared for the three divisions for the prior year: a. Which division is making the best use of invested assets and should be given priority for future capital investments? b. b. Assuming that the minimum acceptable return on new projects is 19%, would all investments that produce a return in excess of 19% be accepted by the divisions? Explain. c. c. Identify opportunities for improving the companys financial performance.
3. The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating Income Invested Assets Retail Division $106,400 $560,000 Commercial Division 44,800 280,000 Internet Division 156,400 680,000 a. Compute the return on investment for each division. (Round to the nearest whole percentage.) Division Percent Retail Division % Commercial Division % Internet Division % b. Which division is the most profitable per dollar invested?
The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $56,000 $280,000 Commercial Division 73,100 430,000 Internet Division 153,600 640,000 a. Compute the return on investment for each division. (Round to the nearest whole number.) Division Percent Retail Division % Commercial Division % Internet Division % b. Which division is the most profitable per dollar invested?
The sales, income from operations, and invested assets for each division of Jackson Corporation are as follows: Sales Income from Operations Invested Assets Division E $4,100,000 $550,000 $2,400,000 Division F 4,700,000 760,000 2,500,000 Division G 7,200,000 860,000 2,800,000 (a) Using the Dupont ROI expanded expression, determine the profit margin, investment turnover, and rate of return on investment for each division. You must provide 3 answers for each division! Round all answers to two decimal places. (b) Which Division is the most profitable per dollar invested? (a) (b)
The income from operations and the amount of invested assets in each division of Beck Industries are as follows: Income from Operations Invested Assets Retail Division $134,000 $670,000 Commercial Division 115,600 680,000 Internet Division 51,000 340,000 a. Compute the return on investment for each division. (Round to the nearest whole number.) Division Percent Retail Division fill in the blank 1 % Commercial Division fill in the blank 2 % Internet Division fill in the blank 3 % b. Which division is the most profitable per dollar invested?
Return on Investment The operating income and the amount of invested assets in each division of Otte Industries are as follows: Operating Income Invested Assets Retail Division $176,400 $840,000 Commercial Division 134,400 560,000 Internet Division 167,500 670,000 a. Compute the return on investment for each division. Division Percent Retail Division: % Commercial Division: % Internet Division: % b. Which division is the most profitable per dollar invested?