The ABC Corporation reported the following information for its Toledo Division: Revenues Operating costs Beginning operating assets Ending operating assets P100,000,000 60,000,000 50,000,000 60,000,000 What is the Toledo Division's return on investment? 67% 73%

The ABC Corporation reported the following information for its Toledo Division: Revenues Operating costs Beginning operating assets Ending operating assets P100,000,000 60,000,000 50,000,000 60,000,000 What is the Toledo Division's return on investment? 67% 73%

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...

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Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last years results: Washingtons actual cost of capital was 12%. Exercise 11-32 Residual Income Refer to the information for Washington Company above. In addition, Washington Companys top management has set a minimum acceptable rate of return equal to 8%. Required: 1. Calculate the residual income for the Adams Division. 2. Calculate the residual income for the Jefferson Division.
Residual income The Commercial Division of Galena Company has operating income of 12,680,000 and assets of 74,500,000. The minimum acceptable return on assets is 12%. What is the residual income for the division?
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?
Refer to Cornerstone Exercise 10.1. Forchen, Inc., requires an 8 percent minimum rate of return. Required: 1. Calculate residual income for the Small Appliances Division. 2. Calculate residual income for the Cleaning Products Division. 3. What if the minimum required rate of return was 9 percent? How would that affect the residual income of the two divisions?
Selected sales and operating data for three divisions of different structural engineering firms are given asfollows:Division A Division B Division CSales ........................................................... $12,000,000 $14,000,000 $25,000,000Average operating assets ............................ $3,000,000 $7,000,000 $5,000,000Net operating income .................................. $600,000 $560,000 $800,000Minimum required rate of return .................. 14% 10% 16%Required:1. Compute the return on investment (ROI) for each division using the formula stated in terms of marginand turnover.2. Compute the residual income for each division.
The following data relate to the Motor Division of Young Company:Sales P10,000,000Variable costs 3,000,000Direct fixed costs 5,000,000Invested capital 8,000,000Allocated actual interest costs 800,000Capital charge 12%Question: What is the divisional return on investment?
Presented below is information related to the Southern Division of Lumber, Inc. Contribution margin$1,235,600Controllable margin$931,270Average operating assets$4,049,000Minimum rate of return16% Compute the Southern Division’s return on investment and residual income. Return on investment%Residual income$
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 15,400,000 $ 28,320,000 $ 25,400,000 Average operating assets $ 3,080,000 $ 7,080,000 $ 5,080,000 Net operating income $ 693,000 $ 396,480 $ 736,600 Minimum required rate of return 7.00 % 7.50 % 14.50 % Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity?
Selected data from Chering Division's accounting records revealed the following: Sales $ 654,900 Average investment $ 301,300 Net operating income $ 55,500 Minimum rate of return (divisional cost of capital) 17 % Chering Division's return on sales (ROS) is:
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Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division A Division B Division C Sales $ 6,100,000 $ 10,100,000 $ 9,200,000 Average operating assets $ 1,525,000 $ 5,050,000 $ 2,300,000 Net operating income $ 317,200 $ 929,200 $ 225,400 Minimum required rate of return 15.00 % 18.40 % 12.00 % Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 17% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity?
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