Benson Corporation operates three investment centers. The following financial statements apply to the investment center namedBowman Division.BOWMAN DIVISIONIncome StatementFor the Year Ended December 31, Year 2$107,28058,47548,805Sales revenueCost of goods soldGross marginOperating expensesSelling expensesDepreciation expenseOperating incomeNonoperating itemLoss on sale of land(2,680)(4,055)42,070(4,600)$ 37,470Net incomeBOWMAN DIVISIONBalance SheetAs of December 31, Year 2Assets$ 12,66240,41637,70090,3789,100CashAccounts receivableMerchandise inventoryEquipment less accumulated depreciationNonoperating assetsTotal assets$190,256LiabilitiesAccounts payableNotes payableStockholders' equity9,45769,000$Common stock79,00032,799Retained earningsTotal liabilities and stockholder's equity$190,256Requiredc. Calculate the ROI for Bowman.d. Benson has a desired ROl of 13 percent. Headquarters has $91,000 of funds to assign to its investment centers. The manager of theBowman Division has an opportunity to invest the funds at an ROI of 15 percent. The other two divisions have investmentopportunities that yield only 14 percent. Calculate the new ROI for Bowman division, if the investment opportunity is adopted byBowman.e. Based on the original data, calculate the original residual income. Also, calculate the new residual income based on informationprovided in Requirement d. Complete this question by entering your answers in the tabs below.Required CRequired DRequired ECalculate the ROI for Bowman. (Round your answer to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).)ROI%< Required CRequired D>

Return on investment- Return on investment or return on costs is a proportion among net income and…

Benson Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division. BOWMAN DIVISION Income Statement For the Year Ended December 31, Year 2 $107,280 58,475 48,805 Sales revenue Cost of goods sold Gross margin Operating expenses Selling expenses Depreciation expense Operating income Nonoperating item Loss on sale of land (2,680) (4,055) 42,070 (4,600) $ 37.470 Net income

Benson Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division. BOWMAN DIVISION Income Statement For the Year Ended December 31, Year 2 $107,280 58,475 48,805 Sales revenue Cost of goods sold Gross margin Operating expenses Selling expenses Depreciation expense Operating income Nonoperating item Loss on sale of land (2,680) (4,055) 42,070 (4,600) $ 37.470 Net income

Financial Reporting, Financial Statement Analysis and Valuation

8th Edition

ISBN:9781285190907

Author:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Publisher:James M. Wahlen, Stephen P. Baginski, Mark Bradshaw

Chapter9: Operating Activities

Section: Chapter Questions

Problem 2AIC

See similar textbooks

Similar questions

Arctic Software Inc. has two product lines. The income statement for the year ended December 31 shows the following: The products, Num 1 and Num 2, are sold in two territories, North and South, as follows: The common fixed expenses are traceable to each territory as follows: The direct expenses of Num 1, 160,000, and of Num 2, 140,000, are not identifiable with either of the two territories. Required: 1. Prepare income statements for the year, segmented by territory and including a column for the entire company. 2. Why are direct expenses of one type of segment report not direct expenses of another type of segment report?
Service department charges In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of 64,560, and the Purchasing Department had expenses of 40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: A. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. B. Using the cost driver information in (A), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. C. Why does the Residential Division have a larger support department allocation than the other two divisions, even though its sales are lower?
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.
Championship Sports Inc. operates two divisionsthe Winter Sports Division and the Summer Sports Division. The following income and expense accounts were provided from the trial balance as of December 31, 20Y9, the end of the fiscal year, after all adjustments, including those for inventories, were recorded and posted: The bases to be used in allocating expenses, together with other information, are as follows: a. Advertising expenseincurred at headquarters, allocated to divisions on the basis of usage: Winter Sports Division, 375,000; Summer Sports Division, 715,000. b. Transportation expenseallocated to divisions at a rate of 4.00 per bill of lading: Winter Sports Division, 17,500 bills of lading; Summer Sports Division, 30,500 bills of lading. c. Accounts receivable collection expenseincurred at headquarters, allocated to divisions at a rate of 1.00 per invoice: Winter Sports Division, 25,000 sales invoices; Summer Sports Division, 43,000 sales invoices. d. Warehouse expenseallocated to divisions on the basis of floor space used in storing division products: Winter Sports Division, 60,000 square feet; Summer Sports Division, 90,000 square feet. Prepare a divisional income statement with two column headings: Winter Sports Division and Summer Sports Division. Provide supporting computations for support department allocations.
Corrections to service department charges Panda Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared The service department charge rate for the service department costs was based on revenues. The following additional information is available a.Does the operating income for the two divisions accurately measure performance? b.Using service charge rates for service department charges, correct the divisional income statements.
Solomon Corporation operates three investment centers. The following financial statements apply to the investment center named Bowman Division. BOWMAN DIVISION Income Statement For the Year Ended December 31, Year 2 Sales revenue $ 107,280 Cost of goods sold 58,875 Gross margin 48,405 Operating expenses Selling expenses (2,680 ) Depreciation expense (4,135 ) Operating income 41,590 Nonoperating item Loss on sale of land (4,000 ) Net income $ 37,590 BOWMAN DIVISION Balance Sheet As of December 31, Year 2 Assets Cash $ 12,532 Accounts receivable 40,316 Merchandise inventory 36,900 Equipment less accumulated depreciation 90,288 Nonoperating assets 9,600 Total assets $ 189,636 Liabilities Accounts payable $ 9,447 Notes payable 67,000 Stockholders’ equity Common stock 70,000 Retained earnings 43,189 Total liabilities and stockholder's…
The following financial information was summarized from the accounting records of Train Corporation for the current year ended December 31: RailsDivision LocomotiveDivision CorporateTotal Cost of goods sold $45,900 $29,900 Direct operating expenses 26,300 21,000 Sales 90,700 66,700 Interest expense $3,000 General overhead 19,100 Income tax 4,100 The income from operations for the Rails Division is a.$64,400 b.$44,800 c.$90,700 d.$18,500
The independent cases are listed below that includes all items relevant to operating activities: Case A Case B Case C Sales revenue $ 61,000 $ 51,000 $ 102,000 Cost of goods sold 33,000 24,000 73,300 Depreciation expense 11,400 1,600 27,400 Salaries and wages expense 4,600 12,600 7,600 Net income 12,000 12,800 (6,300 ) Accounts receivable increase (decrease) (1,200 ) 3,600 2,600 Inventory increase (decrease) 1,600 0 (2,600 ) Accounts payable increase (decrease) 0 2,100 (1,200 ) Salaries and wages payable increase (decrease) 1,300 (1,600 ) 1,200 Compute cash flows from operating activities using the direct method. (Amounts to be deducted should be indicated with a minus sign.) THANK YOU!
An entity and its divisions reported the following for the current year: Sales to unaffiliated customers 40,000,000 Intersegment sales of product similar to those sold to unaffiliated customers 12,000,000 Interest earned on loans to other operating segments 1,000,000 The entity and all of its divisions are engaged solely in manufacturing operations. To qualify as reportable segment, the segment revenue should at least be what amount? A. 5,300,000 B. 4,100,000 C. 5,200,000 D. 4,000,000
ASENSO Company and its divisions are engaged solely in manufacturing. The following data pertain to the industries in which operations were conducted for the current year: Segment Intersegment Sales External Revenue A 1,000,000 5,000,000 B 1,500,000 3,000,000 C 4,000,000 8,000,000 D 2,000,000 2,800,000 E 200,000 900,000 What is the minimum amount of revenue to be considered a major customer? 1,970,000 2,100,000 2,840,000 920,000
ASENSO Company and its divisions are engaged solely in manufacturing. The following data pertain to the industries in which operations were conducted for the current year: Segment Intersegment sales External revenue A 1,000,000 5,000,000 B 1,500,000 3,000,000 C 4,000,000 8,000,000 E 2,000,000 2,800,000 F 200,000 900,000 What is the minimum amount of revenue to be considered a major customer? A. 1,970,000 B. 2,100,000 C. 2,840,000 D. 920,000
Corycorn Corp. and its divisions (each is an operating segment) are engaged solely in manufacturing operations. The following data (consistent with prior years' data) pertain to the operations conducted for the yaer ended December 31, year 1: (Industry Operating Segment) Total revenue Operating profit Identifiable assets at 12/31/Y1 A P10,000,000 P1,750,000 P20,000,000 B 8,000,000 1,400,000 17,500,000 C 6,000,000 1,200,000 12,500,000 D 3,000,000 550,000 7,500,000 E 4,250,000 675,000 7,000,000 F…