Consider the following data for three divisions of a company, X, Y, and Z: Divisional: X Y Z Sales $ 1,483,000 $ 805,000 $ 5,005,000 Operating Income 216,100 59,700 263,800 Investment in assets 625,600 292,500 3,179,600 The return on sales (ROS) for Division Z is: (Round your percentages to one decimal place.) Multiple Choice
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Q35
Consider the following data for three divisions of a company, X, Y, and Z:
Divisional: | X | Y | Z |
---|---|---|---|
Sales | $ 1,483,000 | $ 805,000 | $ 5,005,000 |
Operating Income | 216,100 | 59,700 | 263,800 |
Investment in assets | 625,600 | 292,500 | 3,179,600 |
The return on sales (ROS) for Division Z is: (Round your percentages to one decimal place.)
-
7.4%.
-
8.3%.
-
5.3%.
-
14.6%.
-
20.4%.
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Solved in 2 steps
- 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%Effect of proposals on divisional performance A condensed income statement for the Jet Ski Division of Amazing Rides Inc. for the year ended December 31. 20Y2, is as follows Assume that the Jet Ski Division received no charges from service departments. The president of Amazing Rides has indicated that the division's rate of return on a $15,000,000 investment must be increased to at least 12% by the end of the next year if operations are to continue. The division manager is considering the following three proposals Proposal 1: Transfer equipment with a book value of J3.000.000 to other divisions at no gain or loss and lease similar equipment. The annual lease payments would exceed the amount of depreciation expense on the old equipment by $264,000. This increase in expense would be included as part of the cost of goods sold. Sales would remain unchanged. Proposal 2: Purchase new and more efficient machining equipment and thereby reduce the cost of goods sold by $480,000. Sales would remain unchanged, and the old equipment, which has no remaining book value, would be scrapped at no gain or loss. The new equipment would increase invested assets by an additional $1,000,000 for the year. Proposal 5? Reduce invested assets by discontinuing the tandem jet ski line. This action would eliminate sales of $2,280,000, cost of goods sold of $1,400,000, and operating expenses of $463,600. Assets of $4,200,000 would be transferred to other divisions at no gain or loss. Instructions Which of the three proposals would meet the required 12% return on investment?'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.
- Consider the following data for three divisions of a company, X, Y, and Z: Divisional: X Y Z Sales $ 1,416,000 $ 831,000 $ 5,294,000 Operating Income 197,400 102,700 275,600 Investment in assets 380,600 498,600 3,618,400 The return on sales (ROS) for Division X is: (Round your percentages to one decimal place.)Consider the following data for three divisions of a company, X, Y, and Z: Divisional: X Y Z Sales $ 1,470,000 $ 974,000 $ 4,861,000 Operating Income 173,200 172,300 180,500 Investment in assets 428,200 567,500 2,553,200 The return on sales (ROS) for Division Y is: Multiple Choice 3.7%. 30.4%. 17.7%. 11.8%.Consider the following data for three divisions of a company, X, Y, and Z: Divisional: X Y Z Sales $ 1,339,000 $ 974,000 $ 4,617,000 Operating Income 196,400 111,500 290,100 Investment in assets 469,200 497,200 3,606,700 The return on investment (ROI) for Division X is:
- Q23 Selected data from Box Division's accounting records revealed the following: Sales $ 345,060 Average investment $ 200,100 Net operating income $ 24,300 Minimum rate of return (divisional cost of capital) 11% Box Division's return on sales (ROS) is: (Round your percentages to one decimal place.) Multiple Choice 11.1%. 4.1%. 7.0%. 19.2%. 12.1%.Q7 Consider the following data from two divisions of a company, P and Q: Divisional P Q Sales $ 1,500,000 $ 1,000,000 Operating Income $ 600,000 $ 450,000 Investment $ 4,000,000 $ 2,750,000 If both divisions were presented with an opportunity to invest in a project that is estimated to achieve an ROI of 15%, what will the units likely decide? Multiple Choice Division P will not invest; Division Q will invest. Division P will invest; Division Q will not invest. Neither unit will invest in the projects. Division P will be indifferent; Division Q will not invest. Division P will invest; Division Q will be indifferent.North South East West Sales $100,000 $25,000 $75,000 $76,000 CGS $50,000 $5,000 $50,674 $45,000 other expenses $25,000 $3,000 $12,894 $15,000 Average total assets $5,000,000 $50,000 $300,500 $567,850 Using the information, calculate the operating profit percentage for each of the divisions. Comment on how your analysis has changed compared to your analysis of the dollar amounts for each division. Using total assets as the investment, calculate the ROI for each division. Comment on the results. Assume a cost of capital of 10%. Calculate the RI for each of the divisions. Comment on the results.
- Consider the following data from two divisions of a company, P and Q: Divisional P Q Sales $ 2,000,000 $ 1,100,000 Operating Income $ 800,000 $ 660,000 Investment $ 3,200,000 $ 1,760,000 If the minimum rate of return is 9%, what is Division P's residual income (RI)?Selected sales and operating data for three divisions of three different companies are given below: Division A Division B Division C Sales $6,000,000 $10,000,000 $8,000,000 Average operating assets $1,500,000 $5,000,000 $2,000,000 Net operating income $300,000 $900,000 $180,000 Minimum required rate of return 15% 18% 12% Required: i. Compute the return on investment (ROI) for each division, using the formula stated in terms of margin and turnover. ii. Compute the residual income for each division. iii. Assume that each division is presented with an investment opportunity that would yield a rate of return of 17%. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? Reject? Why? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity? Reject? Why? b. i. What does a manufacturing cycle efficiency (MCE) of less than 1 mean? How would you interpret an MCE of 0.40? ii.…Provide the missing information (A-H) in the table. Use the formulas learned in Chapter 10. (Round to two decimal places.)SHOW ALL CALCULATIONS. ROUND MARGIN, TURNOVER and ROI TO TWO (2) DECIMAL PLACES. Alpha Division Beta Division Delta Division Sales A $420,000 G Operating assets B D $1,000,000 Net operating income $800,000 $21,000 $250,000 Margin 0.16 E 0.10 Turnover C F 2.50 Return on investment (ROI) 20.00% 15.00% H