Shaq Company operates with three segments: Louisiana, Orlando, and Los Angeles.Data regarding these segments is as follows: LouisianaSegmentOrlandoSegmentLos AngelesSegmentContribution to indirect expenses$328,500$207,600$155,500Assets directly used & identified with segment$1,858,700$1,410,000$742,600 1. Calculate the return on investment for each segment. Rank them from highest to lowest. Round percent to 1 decimal place. LouisianaSegmentOrlandoSegmentLos AngelesSegmentSegment Net Income Investment base (assets) ROI (%) Rankings (1,2, or 3, where 1 is the best) 2. Assume the cost of capital is 14% for a segment. Calculate residual income for each segment. Rank them from highest to lowest. Round percent to 1 decimal place. LouisianaSegmentOrlandoSegmentLos AngelesSegmentSegment Net Income Investment base (assets) Cost of Capital (%) Minimum Income Residual Income Rankings (1,2, or 3, where 1 is the best)

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Answered: Shaq Company operates with three…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter7: Variable Costing For Management analysis

Section: Chapter Questions

Problem 16E

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Shaq Company operates with three segments: Louisiana, Orlando, and Los Angeles.

Data regarding these segments is as follows:

	Louisiana Segment	Orlando Segment	Los Angeles Segment
Contribution to indirect expenses	$328,500	$207,600	$155,500
Assets directly used & identified with segment	$1,858,700	$1,410,000	$742,600

1. Calculate the return on investment for each segment. Rank them from highest to lowest. Round percent to 1 decimal place.

	Louisiana Segment	Orlando Segment	Los Angeles Segment
Segment Net Income
Investment base (assets)
ROI (%)
Rankings (1,2, or 3, where 1 is the best)

2. Assume the cost of capital is 14% for a segment. Calculate residual income for each segment. Rank them from highest to lowest. Round percent to 1 decimal place.

	Louisiana Segment	Orlando Segment	Los Angeles Segment
Segment Net Income
Investment base (assets)
Cost of Capital (%)
Minimum Income
Residual Income
Rankings (1,2, or 3, where 1 is the best)

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