Giardin Outdoors is a recreational goods retaller with two divisions: Online and Stores. The two divisions both use the services of thecorporate Finance and Accounting (F and A) Department. Annual costs of the F and A Department total $5.2 million a year. ManagersIn the two operating divisions are measured based on division operating profits.The following selected data are available for the two operating divisions:Revenues(5000)$ 74,10039,900OnlineStoresRequired:Determine the cost allocation if $3.8 million of the F and A costs are fixed and allocated on the basis of revenues, and the remainingcosts, which are variable, are allocated on the basis of transactions.Note: Do not round Intermediate calculations. Enter your answers in dollars, not in millions or thousands.FixedVariableTotal$Transactions(000)1,066.5283.5Online$Stores

Lets understand the basics. Cost of service department is required to be allocated to production…

Giardin Outdoors is a recreational goods retaller with two divisions: Online and Stores. The two divisions both use the se corporate Finance and Accounting (F and A) Department. Annual costs of the F and A Department total $5.2 million a ye In the two operating divisions are measured based on division operating profits. The following selected data are available for the two operating divisions: Online Stores Fixed Variable Total Revenues (5000) $ 74,100 39,900 Required: Determine the cost allocation if $3.8 million of the F and A costs are fixed and allocated on the basis of revenues, and th costs, which are variable, are allocated on the basis of transactions. Note: Do not round Intermediate calculations. Enter your answers in dollars, not in millions or thousands. $ Transactions (000) 1,066.5 283.5 Online 0 $ Stores

Giardin Outdoors is a recreational goods retaller with two divisions: Online and Stores. The two divisions both use the se corporate Finance and Accounting (F and A) Department. Annual costs of the F and A Department total $5.2 million a ye In the two operating divisions are measured based on division operating profits. The following selected data are available for the two operating divisions: Online Stores Fixed Variable Total Revenues (5000) $ 74,100 39,900 Required: Determine the cost allocation if $3.8 million of the F and A costs are fixed and allocated on the basis of revenues, and th costs, which are variable, are allocated on the basis of transactions. Note: Do not round Intermediate calculations. Enter your answers in dollars, not in millions or thousands. $ Transactions (000) 1,066.5 283.5 Online 0 $ Stores

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 1CE: Forchen, Inc., provided the following information for two of its divisions for last year: Required:...

See similar textbooks

Similar questions

Forchen, Inc., provided the following information for two of its divisions for last year: Required: 1. For the Small Appliances Division, calculate: a. Average operating assets b. Margin c. Turnover d. Return on investment (ROI) 2. For the Cleaning Products Division, calculate: a. Average operating assets b. Margin c. Turnover d. Return on investment (ROI) 3. What if operating income for the Small Appliances Division was 2,000,000? How would that affect average operating assets? Margin? Turnover? ROI? Calculate any changed ratios (round to four significant digits).
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?
Last Resort Industries Inc. is a privately held diversified company with five separate divisions organized as investment centers. A condensed income statement for the Specialty Products Division for the past year, assuming no support department allocations, along with asset information is as follows: The manager of the Specialty Products Division was recently presented with the opportunity to add an additional product line, which would require invested assets of 14,400,000. A projected income statement for the new product line is as follows: The Specialty Products Division currently has 27,000,000 in invested assets, and Last Resort Industries Inc.s overall return on investment, including all divisions, is 10%. Each division manager is evaluated on the basis of divisional return on investment. A bonus is paid, in 8,000 increments, for each whole percentage point that the divisions return on investment exceeds the company average. The president is concerned that the manager of the Specialty Products Division rejected the addition of the new product line, even though all estimates indicated that the product line would be profitable and would increase overall company income. You have been asked to analyze the possible reasons the Specialty Products Division manager rejected the new product line. a. Determine the return on investment for the Specialty Products Division for the past year. b. Determine the Specialty Products Division managers bonus for the past year. c. Determine the estimated return on investment for the new product line. Round percentages to one decimal place and the investment turnover to two decimal places. d. Why might the manager of the Specialty Products Division decide to reject the new product line? Support your answer by determining the projected return on investment for 20Y6, assuming that the new product line was launched in the Specialty Products Division and 20Y6 actual operating results were similar to those of 20Y5. e. Suggest an alternative performance measure for motivating division managers to accept new investment opportunities that would increase the overall company income and return on investment.
Dantrell Palmer has just been appointed manager of Kirchner Glass Products Division. He has two years to make the division profitable. If the division is still showing a loss after two years, it will be eliminated, and Dantrell will be reassigned as an assistant divisional manager in another division. The divisional income statement for the most recent year is as follows: Upon arriving at the division, Dantrell requested the following data on the divisions three products: He also gathered data on a proposed new product (Product D). If this product is added, it would displace one of the current products; the quantity that could be produced and sold would equal the quantity sold of the product it displaces, although demand limits the maximum quantity that could be sold to 20,000 units. Because of specialized production equipment, it is not possible for the new product to displace part of the production of a second product. The information on Product D is as follows: Required: 1. Prepare segmented income statements for Products A, B, and C. 2. Determine the products that Dantrell should produce for the coming year. Prepare segmented income statements that prove your combination is the best for the division. By how much will profits improve given the combination that you selected? (Hint: Your combination may include one, two, or three products.)
Jarriot, Inc., presented two years of data for its Furniture Division and its Houseware Division. Required: 1. Compute the ROI and the margin and turnover ratios for each year for the Furniture Division. (Round your answers to four significant digits.) 2. Compute the ROI and the margin and turnover ratios for each year for the Houseware Division. (Round your answers to four significant digits.) 3. Explain the change in ROI from Year 1 to Year 2 for each division.
Corazon Manufacturing Company has a purchasing department staffed by five purchasing agents. Each agent is paid 28,000 per year and is able to process 4,000 purchase orders. Last year, 17,800 purchase orders were processed by the five agents. Required: 1. Calculate the activity rate per purchase order. 2. Calculate, in terms of purchase orders, the: a. total activity availability b. unused capacity 3. Calculate the dollar cost of: a. total activity availability b. unused capacity 4. Express total activity availability in terms of activity capacity used and unused capacity. 5. What if one of the purchasing agents agreed to work half time for 14,000? How many purchase orders could be processed by four and a half purchasing agents? What would unused capacity be in purchase orders?
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.
Papa Johns International, Inc. (PZZA), operates over 5,000 restaurants in the United States and 45 countries. The company operates primarily as a franchisor with 4,353 franchised restaurants and 744 company-operated restaurants. Recent data (in millions) for the company-operated and North America franchised restaurants are as follows: a. Determine the profit margin for each segment. Round to one decimal place. b. Determine the investment turnover for each segment. Round to two decimal places. c. Use the DuPont formula to determine the return on investment for each segment. Round to one decimal place. d. Analyze and interpret the results of (a), (b), and (c).
Panera Bread Company (PNRA) operates over 2,000 bakery-cafe locations throughout the United States and Canada and serves over 9 million customers per week. Paneras operations are divided into the following segments: Company-Operated Bakery-Cafes Franchised Bakery-Cafes Fresh Dough and Other Products The Fresh Dough and Other Products segment supplies fresh dough, produce, tuna, and other products to the company-operated and franchised cafes. Recent data (in millions) for each of these segments are as follows: a. Determine the profit margin for each segment. Round to one decimal place. b. Determine the investment turnover for each segment. Round to two decimal places. c. Use the DuPont formula to determine the return on investment for each segment. Round to one decimal place. d. Which segment has the highest profit margin, investment turnover, and return on investment? Explain why. e. If franchised cafes are more profitable, why would Panera operate company- owned cafes? MAD 24-3 Analyze Papa Johns International, Inc.Obj. 6 Papa Johns International, Inc. (PZZA), operates over 5,000 restaurants in the United States and 45 countries. The company operates primarily as a franchisor with 4,353 franchised restaurants and 744 company-operated restaurants. Recent data (in millions) for the company-operated and North America franchised restaurants are as follows: a. Determine the profit margin for each segment. Round to one decimal place. b. Determine the investment turnover for each segment. Round to two decimal places. c. Use the DuPont formula to determine the return on investment for each segment. Round to one decimal place. d. Analyze and interpret the results of (a), (b), and (c). MAD 24-4 Compare Panera Bread and Papa JohnsObj. 6 Compare Panera Bread (PNRA) and Papa Johns (PZZA) using your computations from MAD 24-2 and MAD 24-3.
Panera Bread Company (PNRA) operates over 2,000 bakery-cafe locations throughout the United States and Canada and serves over 9 million customers per week. Paneras operations are divided into the following segments: Company-Operated Bakery-Cafes Franchised Bakery-Cafes Fresh Dough and Other Products The Fresh Dough and Other Products segment supplies fresh dough, produce, tuna, and other products to the company-operated and franchised cafes. Recent data (in millions) for each of these segments are as follows: a. Determine the profit margin for each segment. Round to one decimal place. b. Determine the investment turnover for each segment. Round to two decimal places. c. Use the DuPont formula to determine the return on investment for each segment. Round to one decimal place. d. Which segment has the highest profit margin, investment turnover, and return on investment? Explain why. e. If franchised cafes are more profitable, why would Panera operate company- owned cafes?
Columbia Products Inc. has two divisions, Salem and Seaside. For the month ended March 31, Salem had sales and variable costs of 500,000 and 225,000, respectively, and Seaside had sales and variable costs of 800,000 and 475,000, respectively. Salem had direct fixed production and administrative expenses of 60,000 and 35,000, respectively, and Seaside had direct fixed production and administrative expenses of 80,000 and 45,000, respectively. Fixed costs that were common to both divisions and couldnt be allocated to the divisions in any meaningful way were selling, 33,000, and administration, 27,000. Prepare a segmented income statement by division for March.
Kanye Achebe just became the operations manager of Weston Transportation. Weston transports large crates for online companies and transports containers overseas. Kanye would like to evaluate each divisional manager on a basis similar to segmental reporting required by generally accepted accounting principles (GAAP) financial statements contained in annual reports. These data include a presentation of net sales, operating profit and loss before and after taxes, total identifiable assets, and depreciation for segment reported. Kanye thinks that evaluating business division managers by the same criteria as the total company is appropriate. A. Explain why you think the chief financial officer (CFO) disagrees and tells Kanye that publicly reporting information might demotivate managers. B. For better evaluation of the managers, what type of information should Kanye propose that the CFO might accept?