Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 5.01 percent. Selected operating data for the three divisions follow: Peak View Grand 337,000 $ 223,000 $ 310,000 119,000 32,000 870,000 Sales revenue Cost of goods sold Miscellaneous operating expenses Average invested assets 210,000 42,000 1,370,000 192,000 35,000 1,135,000 Required: 1. Compute the return on investment for each division. 2. Compute the residual income for each division. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Compute the return on investment for each division. (Enter your ROI answers as a percentage rounded to two decimal places, (i.e., 0.1234 should be entered as 12.34%.)) Peak View Grand Return on Investment < Required1 Required 2 Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 5.01 percent. Selected operating data for the three divisions follovw: Peak View Grand 310,000 192,000 Sales revenue Cost of goods sold Miscellaneous operating expenses Average invested assets 337,000 $ 223,000 $ 210,000 42,000 1,370,000 119,000 32,000 870,000 35,000 1,135,000 Required: 1. Compute the return on investment for each division. 2. Compute the residual income for each division. Complete this question by entering your answers in the tabs below. Required 1 Required 2 come f******* divicion Ounts termedi Compute the residual income for each division. (Loss amounts should be indicated by a minus sign. Do not round intermediate: calculations. Round your answers to nearest whole dollar.) Peak View Grand Residual Income (Loss) Required 1 Required 2 >

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter18: Pricing And Profitability Analysis

Section: Chapter Questions

Problem 37P

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Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 5.01 percent. Selected operating data for the three divisions follow:

		Peak		View		Grand
Sales revenue	$	337,000	$	223,000	$	310,000
Cost of goods sold		210,000		119,000		192,000
Miscellaneous operating expenses		42,000		32,000		35,000
Average invested assets		1,370,000		870,000		1,135,000

Required:
1. Compute the return on investment for each division.
2. Compute the residual income for each division.

Luke Company has three divisions: Peak, View, and Grand. The company has a hurdle rate of 5.01 percent. Selected operating data for
the three divisions follow:
Peak
View
Grand
337,000 $ 223,000 $ 310,000
119,000
32,000
870,000
Sales revenue
Cost of goods sold
Miscellaneous operating expenses
Average invested assets
210,000
42,000
1,370,000
192,000
35,000
1,135,000
Required:
1. Compute the return on investment for each division.
2. Compute the residual income for each division.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
Compute the return on investment for each division. (Enter your ROI answers as a percentage rounded to two decimal places,
(i.e., 0.1234 should be entered as 12.34%.))
Peak
View
Grand
Return on Investment
< Required1
Required 2

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