Spare parts Division of Toyota Company reported the following data last year: Return on investment Minimum required rate of return Residual income 20% 12% $ 500,000 The division's net operating income last year was: $1,250,000 O $2,500,000 $1,000,000 $750,000

Spare parts Division of Toyota Company reported the following data last year: Return on investment Minimum required rate of return Residual income 20% 12% $ 500,000 The division's net operating income last year was: $1,250,000 O $2,500,000 $1,000,000 $750,000

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 3SEQ: Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of...

See similar textbooks

Related questions

Q: cost accounting; The manager of Dukey's Shoe Station estimates operating costs for the year will…

A: Break-even Sales represents that particular point of sale where there is no operating profit/loss.…

Q: Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000…

A: 1. The margin related to this investment opportunity Particulars Amount Sales $ 420000…

Q: The contribution format income statement for Huerra Company for last year is given below: Total Unit…

A: SOLUTION- 4 PARTICULARS AMOUNT EFFECT SALES 992000 OPERATING INCOME (84000 +6000) 90000…

Q: Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000…

A: Residual income refers to the income that is left after making all the necessary payments of the…

Q: The contribution format income statement for Huerra Company for last year is given below:…

A: Return on investment: It is used to measure the efficiency of the investment of the organisation.

Q: Calculating Residual Income Forchen, Inc., provided the following information for two of its…

A: Residual income = Operating income - Minimum return * ( Average operating asset )

Q: 11. What is last year’s residual income? 12. What is the residual income of this year’s…

A: Residual Income :— Residual Income is income that one continues to receive after the completion of…

Q: Westerville Company reported the following results from last year’s operations: Sales $…

A: ROI is one of the profitability ratio which shows ratio between net operating income with average…

Q: westerville company reported the following results from last year's operations: sales $1,600,000…

A: An investment property is a piece of real estate purchased with the intention of generating a profit…

Q: Drake Company produces a single product. Last year's income statement is as follows: Sales (21,000…

A: Break even point is the units sold at which the company is in no-profit, no-loss situation. This…

Q: Silver Incorporated reported the following results from last year’s operations: Sales $…

A: Return on investment (ROI) :— It is the ratio between net operating income and average operating…

Q: Coolbrook Company has the following information available for the past year: River Division…

A: Since the student has posted multiple questions, only the first two are answerable. Thank You.

Q: Drake Company produces a single product. Last year's income statement is as follows: Sales (21,000…

A: Break even point : It refers to that point where total cost is equal to total revenue, i e. It is…

Q: Westerville Company reported the following results from last year’s operations: Sales $…

A: Lets understand the basics. Return on investment is a net operating income generated by using its…

Q: Righteous Company recorded operating data for its shoe division for the year. The company's desired…

A: Controllable margin Means:- Controllable margin = Contribution margin - direct fixed cost

Q: Westerville Company reported the following results from last year’s operations: Sales $…

A: Profit margin is the percentage of income earned on the sales of a period after deducting the…

Q: Coolbrook Company has the following information available for the past year: River Stream Division…

A: 1) Return on investment (ROI)=Net operating incomeAverage investment assets×100River…

Q: Sandhill Corporation has collected the following information after its first year of sales. Sales…

A: (1) Contribution margin for current year [Refer working note 1] $294000…

Q: If sales reduce to half of the amount in the next month, what is the projected operating income?…

A: Current Sales = $40000 Sales reduces to half in next month. Next Month Sales = $20000 Variable Cost…

Q: Division A of Muscat Company had the following results for the year just ended: Sales $480,000…

A: Compute the effect on Division A’s ROI if it introduces the new product line. Step 1: Determine the…

Q: Westerville Company reported the following results from last year’s operations: Sales $…

A: Investment is the amount of money invested in some kind of securities like bonds, shares or in…

Q: Westerville Company reported the following results from last year’s operations: Sales $ 1,200,000…

A: 5. Turnover = $240,000$150,000=1.6

Q: Allana recorded operating data for its Xyza division for the year. The company requires its return…

A: Controllable margin means contribution margin after deduction of fixed cost. Return on investment is…

Q: 9. If the company pursues the investment opportunity and otherwise performs the same as last year,…

A: Return on Investment (ROI) is a measure by which a person calculate the Profitability of the…

Q: Westerville Company reported the following results from last year’s operations: Sales $ 1,500,000…

A: Solution... (1). Last year's margin = Net income ÷ sales = $375,000 ÷ $1,500,000 = 0.25 =…

Q: Tennill Inc. has a $1,400,000 investment opportunity with the following characteristics: Sales $…

A: Formula: ROI = Turnover x Margin

Q: Calculating Residual Income Forchen, Inc., provided the following information for two of its…

A: Residual income = Operating income - (Average operating assets * Minimum rate of return) Average…

Q: Calculating Residual Income Forchen, Inc., provided the following information for two of its…

A: Residual income is the difference of Actual operating income and income at desired rate of return.

Q: . Assume that the operating results for last year were as follows: Sales $360,000 Less: Variable…

A: Incremental approach of income statement indicates the incremental values of revenue as well as…

Q: Westerville Company reported the following results from last year’s operations: Sales $…

A: 1. Margin related to this year’s investment opportunity = Net operating income/Sales Net operating…

Q: [The following information applies to the questions displayed below.] Westerville Company reported…

Q: Division B had an ROI last year of 15%. The division's minimum required rate of return is 10%. If…

A: Residual income is defined as the amount of money left over after deducting all investment costs…

Q: Coolbrook Company has the following information available for the past year: River Division…

A: 1) River division Stream division Sales revenue 1209000 1810000 Cost and…

Q: 1. If the company pursues the investment opportunity and otherwise performs the same as last year,…

Q: ivision Cleaning Products Division Sales $34,620,000…

A: Average Operating assets [A= (Jan1+Dec 31)/2 Minimum rate of return [B] Minimum income…

Q: The contribution format income statement for Huerra Company for last year is given below: Total Unit…

A: Solution 1: Particulars Amount Sales $998,000.00 Operating income $80,000.00 Average…

Q: Scottso Division has the following results for the year: * $1,080,000 Revenues Variable expenses…

A: Net income = $1,080,000 - $440,000 - $400,000 = $240,000

Q: 5. As a result of a more intense effort by sales people, sales are increased by 10%; operating…

A: 1. The Margin, Turnover and ROI is calculated without considering the adjustments. 2. The above is…

Q: 1- what is last years residual income? 2- what is the residual income of this years investment…

A: residual income = Net operating income - Minimum required return in the given question it is said…

Q: The contribution format income statement for Huerra Company for last year is given below:…

A: ROI formula in terms of Margin &Turnover is as follows --…

Q: The contribution format income statement for Huerra Company for last year is given below:…

A: Margin = Net operating income (NOI ) / Sales Turnover = ( Sales / Operating assets ) ROI = NOI /…

Q: Income Statements and Firm Performance: Variable and AbsorptionCostingJellison Company had the…

A: An income statement is a statement that summarizes a company's profits and costs. It also displays…

Q: Westerville Company reported the following results from last year’s operations: Sales $…

Q: 1. Assume that the contribution margin ratio of the investment opportunity was 65% instead of 70%.…

A: Solution:- 1)Calculations if the contribution margin ratio of the investment opportunity was 65%…

Q: Required information [The following information applies to the questions displayed below.] Data for…

A: This question deals with the concept of whether increase in advertising budget or not. We will…

Q: The following information applies to the questions displayed below.] Westerville Company…

A: Margin is calculated by dividing the net operating profits by the total sales.

Q: 6. What is the ROI related to this year’s investment opportunity? (Do not round intermediate…

A: Return of investment (ROI) stands for the Income, as a percentage of the Investment, that a Business…

Q: Alpha Corporation recorded operating data for its Omega division for the year. Alpha requires its…

Q: A division sold 250,000 calculators during 2020: Sales 3,000,000 Variable costs: Materials 690,000…

A: Total contribution margin = Sales - Total variable costs = $3,000,000 - $1,250,000 Total…

Q: Westerville Company reported the following results from last year’s operations: Sales $…

A: “Since you have posted a question with multiple sub-parts, we will solve first three sub-parts for…

Question

Spare parts Division of Toyota Company reported the following data last year:
Return on investment
Minimum required rate of return
Residual income
20%
12%
$ 500,000
The division's net operating income last year was:
O $1,250,000
$2,500,000
$1,000,000
$750,000

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

Macom Manufacturing has total contribution margin of $61,250 and net income of $24,500 for the month of June. Marcus expects sales volume to increase by 10% in July. What are the degree of operating leverage and the expected percent change in income for Macom Manufacturing? 0.4 and 10% 2.5 and 10% 2.5 and 25% 5.0 and 50%
Wallace Industries has total contribution margin of $58,560 and net income of $24,400 for the month of April. Wallace expects sales volume to increase by 5% in May. What are the degree of operating leverage and the expected percent change in income for Wallace Industries? 0.42 and 2.2% 0.42and5% 2.4andl2% 2.Sandl3%
Cost-Volume-Profit, Margin of Safety Victoria Company produces a single product. Last years income statement is as follows: Required: 1. Compute the break-even point in units and sales dollars calculated using the break-even units. 2. What was the margin of safety for Victoria last year in sales dollars? 3. Suppose that Victoria is considering an investment in new technology that will increase fixed cost by 250,000 per year but will lower variable costs to 45% of sales. Units sold will remain unchanged. Prepare a budgeted income statement assuming that Victoria makes this investment. What is the new break-even point in sales dollars, assuming that the investment is made?
Company A has current sales of $10,000,000 and a 45% contribution margin. Its fixed costs are $3,000,000. Company B is a service firm with current service revenue of $5,000,000 and a 20% contribution margin. Company Bs fixed costs are $500,000. Compute the degree of operating leverage for both companies. Which company will benefit most from a 25% increase in sales? Explain why.
Margin of safety Jorgensen Company has sales of 380,000,000, and the break-even point in sales dollars is 323,000,000. Determine Jorgensen Companys margin of safety as a percent of current sales.
A company is spending 70,000 per year for inspecting, 60,000 per year for purchasing, and 56,000 per year for reworking products. What is a good estimate of non-value-added costs? a. 126,000 b. 70,000 c. 56,000 d. 130,000
Katayama Company produces a variety of products. One division makes neoprene wetsuits. The divisions projected income statement for the coming year is as follows: Required: 1. Compute the contribution margin per unit, and calculate the break-even point in units. Repeat, using the contribution margin ratio. 2. The divisional manager has decided to increase the advertising budget by 140,000 and cut the average selling price to 200. These actions will increase sales revenues by 1 million. Will this improve the divisions financial situation? Prepare a new income statement to support your answer. 3. Suppose sales revenues exceed the estimated amount on the income statement by 612,000. Without preparing a new income statement, determine by how much profits are underestimated. 4. How many units must be sold to earn an after-tax profit of 1.254 million? Assume a tax rate of 34 percent. (Round your answer up to the next whole unit.) 5. Compute the margin of safety in dollars based on the given income statement. 6. Compute the operating leverage based on the given income statement. (Round to three significant digits.) If sales revenues are 20 percent greater than expected, what is the percentage increase in profits?
Contribution margin, break-even sales, cost-volume-profit chart, margin of safety, and operating leverage Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: It is expected that 12,000 units will be sold at a price of 240 a unit. Maximum sales within the relevant range are 18,000 units. Instructions 1. Prepare an estimated income statement for 20Y7. 2. What is the expected contribution margin ratio? 3. Determine the break-even sales in units and dollars. 4. Construct a cost-volume-profit chart indicating the break-even sales. 5. What is the expected margin of safety in dollars and as a percentage of sales? (Round to one decimal place.) 6. Determine the operating leverage.
Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: At the beginning of last year, Elway had 28,300,000 in operating assets. At the end of the year, Elway had 23,700,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin and turnover ratios for last year. (Note: Round the answer for margin ratio to two decimal places.) 3. Compute ROI. (Note: Round answer to two decimal places.) 4. CONCEPTUAL CONNECTION Briefly explain the meaning of ROI. 5. CONCEPTUAL CONNECTION Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company).
Suppose that a company is spending 60,000 per year for inspecting, 30,000 for purchasing, and 40,000 for reworking products. A good estimate of nonvalue-added costs would be a. 70,000. b. 130,000. c. 40,000. d. 90,000. e. 100,000.
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 Tipton Division of Dudley Company reported the following data last year: Return on investment 20% Minimum required rate of return 12% Residual income $ 50,000 The division's net operating income last year was?