Flamengo Co is a sporting goods manufacturing. It has the following three divisions: Basketball Football Division Soccer Division Division Sales $1,250,000 Net operating income $25,000 $75,000 $36,000

Flamengo Co is a sporting goods manufacturing. It has the following three divisions: Basketball Football Division Soccer Division Division Sales $1,250,000 Net operating income $25,000 $75,000 $36,000

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Vernon transport company divides its operations into four divisions. A recent statement for its West Division folows Vernon Transport Comapny Wesy division Income Statement for year 3 Revenue $670,000 Salaries for drivers (520,000) Fuel expenses (67,000) Insurance (87,000) Division-level facility- sustaining costs (57,000) Companywide facility-sustaining costs (147,000) Net loss $208,000 Required a) By how much would cormpanywide income increase or decrease if West Division is estimated? Should West Division be eliminated? b) assume that West Division is able to increase its revenue to $760,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segemnt were eliminated. Should West Division be eliminated if revenue were $760,000? c) What is the mininum amount of revenue required to Jusify continuing the operation of West Divison? Complete this question by entering your answer in the table below. Income Would…
Chao, Incorporated, a service provider, has two divisions. The firm’s most recent annual contribution format segmented income statement appears below. Total Company Eastern Division Western Division Sales $ 450,000 $ 90,000 $ 360,000 Variable expenses 243,000 27,000 216,000 Contribution margin 207,000 63,000 144,000 Traceable fixed expenses 100,800 46,800 54,000 Division segment margin 106,200 $ 16,200 $ 90,000 Common fixed expenses 72,000 Net operating income $ 34,200 If the company eliminates the Western Division and the Eastern Division sales increase by 10% as a result, how much will the company’s net operating income decrease? multiple choice $83,700 $88,380 $90,000 $137,700 $144,000
Fashion Forward, Inc. is decentralized into two divisions which are investment centers: Men’s Wear and Women’s Wear. For the past year, the Women’s Wear division had the following ratios: Return on Investment 27% Profit Margin 15% Investment Turnover 1.8 The following data relates to the Men’s Wear division for the past year. Sales $18,000,000 Cost of goods sold $12,000,000 Operating expenses $4,200,000 Invested assets $10,000,000 Question A) Fashion Forward awards bonuses to divisional mangers equal to $4,000 for each percentage point by which divisional ROI exceeds 12%. Calculate the bonus that the Men’s Wear division manager received last year. (show work) Question B) Calculate the profit margin for the Men’s Wear division for the past year. (show work)
Megamart, a retailer of consumer goods, provides the following information on two of its departments (each considered an investment center). Investment Center Sales Income AverageInvested Assets Electronics $ 40,000,000 $ 2,880,000 $ 16,000,000 Sporting goods 20,000,000 2,040,000 12,000,000 Exercise 22-10 Computing return on investment and residual income; investing decision LO A1 1. Compute return on investment for each department. Using return on investment, which department is most efficient at using assets to generate returns for the company?2. Assume a target income level of 12% of average invested assets. Compute residual income for each department. Which department generated the most residual income for the company?3. Assume the Electronics department is presented with a new investment opportunity that will yield a 15% return on investment. Should the new investment opportunity be accepted?
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Rundle Transport Company divides its operations into four divisions. A recent income statement for its West Division follows. RUNDLE TRANSPORT COMPANY West Division Income Statement for Year 3 Revenue $ 620,000 Salaries for drivers (470,000 ) Fuel expenses (62,000 ) Insurance (82,000 ) Division-level facility-sustaining costs (52,000 ) Companywide facility-sustaining costs (142,000 ) Net loss $ (188,000 ) Required By how much would companywide income increase or decrease if West Division is eliminated? Should West Division be eliminated? Assume that West Division is able to increase its revenue to $690,000 by raising its prices. Determine the amount of the increase or decrease that would occur in companywide net income if the segment were eliminated. Should West Division be eliminated if revenue were $690,000? What is the minimum amount of revenue required to justify continuing the operation of West Division?
Nicholas Technologies operates two divisions: Hardware Services and Software Services. During the current month, the two divisions reported the following results. Hardware Software Sales $ 660,000 $ 720,000 Variable costs (as a percentage of sales) 40 % 45 % Traceable fixed costs $ 250,000 $ 125,000 In addition, fixed costs common to both divisions amounted to $229,000. Prepare an income statement showing percentages as well as dollar amounts. Conclude your statement with income from operations for the business and with the responsibility margin for each division. (Round percentage answers to 2 decimal place. i.e. 0.1234 should be considered as 12.34%.)
Kelfour Enterprises has divided its operations into two divisions. Relevant accounting data for each division is as follows: Divisions Sales Operating Assets Operating Income Western Division $ 330,000 $ 280,000 $ 33,000 Eastern Division $ 480,000 $ 330,000 $ 34,500 Kelfour has an additional $68,000 of funds to invest. The manager of the Western Division believes that she can invest the funds at a rate of return (ROI) of 23.00% while the manager of the Eastern Division has found a new investment opportunity that is expected to yield a 21.00% ROI. Kelfour uses residual income (RI) to evaluate managerial performance. The company wide desired ROI is 19.00%. Based on this information Multiple Choice The manager of the Western Division would accept the $68,000 additional investment opportunity because it would increase the Division's RI by $2,720. The manager of the Eastern Division would accept the $68,000 additional investment…
Fashion Forward, Inc. is decentralized into two divisions which are investment centers: Men’s Wear and Women’s Wear. For the past year, the Women’s Wear division had the following ratios: Return on Investment 27% Profit Margin 15% Investment Turnover 1.8 The following data relates to the Men’s Wear division for the past year. Sales $18,000,000 Cost of goods sold $12,000,000 Operating expenses $4,200,000 Invested assets $10,000,000 Question A) Calculate the investment turnover for the Men’s Wear division for the past year (show work) Question B) For the division with the lower ROI, which ratio (profit margin or investment turnover) should the manager try to improve in order to raise the ROI of the division? What does the manager need to do in…
Provisions Company, a manufacturer of office supplies, provides the following financial information: Pen Division Pencil Division Operating income $100,000 $40,000 Net sales $500,000 $150,000 Total assets at Jan. 1 $580,000 $350,000 Total assets at Dec. 31 $610,000 $300,000 Calculate the return on investment for the Pen Division. (Round your answer to two decimal places.)
Wyrich Corporation has two divisions: Blue Division and Gold Division. The following report is for the most recent operating period: Total Company Blue Division Gold Division Sales $ 522,000 $ 391,000 $ 131,000 Variable expenses 160,670 89,930 70,740 Contribution margin 361,330 301,070 60,260 Traceable fixed expenses 286,000 239,000 47,000 Segment margin 75,330 $ 62,070 $ 13,260 Common fixed expenses 73,080 Net operating income $ 2,250 The Gold Division's break-even sales is closest to: $102,174 $261,043 $142,043 $518,750
Aguila Company has two major segments with the following information: Skyscraper Ground Zero Total Annual Revenue P200,000 P600,000 P800,000 Annual Salesperson Salaries P30,000 P45,000 P75,000 Number of Customers 50 75 125 Miles Driven 80,000 40,000 120,000 The business also has overhead costs as follows: Cost pool Cost in pool Cost driver Travel P36,000 miles driven Entertainment P144,000 number of customers Administrative P150,000 salaries…