Just need the answer to the last part. Thanks!Please don't provide solutions image based thnx Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the threedivisions are as follows:Sales revenueCost of goods soldMiscellaneous operating expensesInterest and taxesAverage invested assetsRequired:1. Compute the ROI for each division.2. Compute the residual income for each division.3. Rank the divisions according to the ROI and residual income of each.4-a. Compute the return on investment on the proposed expansion project.4-b. Is this an acceptable project?Wescott is considering an expansion project in the upcoming year that will cost $6.2 million and return $554,000 per year. The projectwould be implemented by only one of the three divisions.Complete this question by entering your answers in the tabs below.Req 15. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI.6. Compute the new ROI and residual income for each division if the project was implemented within that division.Req 2Division ADivision BDivision CDivision A$ 1,305,000806,00074,00058,00010,030,000ROIReq 3%%%Req 4AResidualIncome (Loss)Division B$ 1,110,000815,00062,00051,0002,400,000Req 4BReq 5Compute the new ROI and residual income for each division if the project was implemented within that division.Note: Loss amounts should be entered with a minus sign. Enter your ROI percentage answers to 2 decimal places, (i.e.,0.1234 should be entered as 12.34%.). Enter your answers in whole dollars not in millions.Division C$ 1,118,000812,00063,00051,0003,947,000Req 6

Residual Income is used to assess the economic value added by an investment or business unit. If the…

Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes Average invested assets Division A $ 1,305,000 806,000 74,000 58,000 10,030,000 Required: 1. Compute the ROI for each division. 2. Compute the residual income for each division. Division B $ 1,110,000 815,000 62,000 51,000 2,400,000 Wescott is considering an expansion project in the upcoming year that will cost $6.2 million and return $554,000 per year. The project would be implemented by only one of the three divisions. 3. Rank the divisions according to the ROI and residual income of each. 4-a. Compute the return on investment on the proposed expansion project. 4-b. Is this an acceptable project? Division C $ 1,118,000 812,000 63,000 51,000 3,947,000 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI. 6. Compute the new ROI and residual income for each division if the project was implemented within that division.

Wescott Company has three divisions: A, B, and C. The company has a hurdle rate of 8 percent. Selected operating data for the three divisions are as follows: Sales revenue Cost of goods sold Miscellaneous operating expenses Interest and taxes Average invested assets Division A $ 1,305,000 806,000 74,000 58,000 10,030,000 Required: 1. Compute the ROI for each division. 2. Compute the residual income for each division. Division B $ 1,110,000 815,000 62,000 51,000 2,400,000 Wescott is considering an expansion project in the upcoming year that will cost $6.2 million and return $554,000 per year. The project would be implemented by only one of the three divisions. 3. Rank the divisions according to the ROI and residual income of each. 4-a. Compute the return on investment on the proposed expansion project. 4-b. Is this an acceptable project? Division C $ 1,118,000 812,000 63,000 51,000 3,947,000 5. Without any additional calculations, state whether the proposed project would increase or decrease each division's ROI. 6. Compute the new ROI and residual income for each division if the project was implemented within that division.

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:...

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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?
Corrections to service department charges Panda Airlines Inc. has two divisions organized as profit centers, the Passenger Division and the Cargo Division. The following divisional income statements were prepared The service department charge rate for the service department costs was based on revenues. The following additional information is available a.Does the operating income for the two divisions accurately measure performance? b.Using service charge rates for service department charges, correct the divisional income statements.
Xenold, Inc., manufactures and sells cooktops and ovens through three divisions: Home, Restaurant, and Specialty. Each division is evaluated as a profit center. Data for each division for last year are as follows (numbers in thousands): The income tax rate for Xenold, Inc., is 40 percent. Xenold, Inc., has two sources of financing: bonds paying 5 percent interest, which account for 25 percent of total investment, and equity accounting for the remaining 75 percent of total investment. Xenold, Inc., has been in business for over 15 years and is considered a relatively stable stock, despite its link to the cyclical construction industry. As a result, Xenold stock has an opportunity cost of 5 percent over the 4 percent long-term government bond rate. Xenolds total capital employed is 5.04 million (2,600,000 for the Home Division, 1,700,000 for the Restaurant Division, and the remainder for the Specialty Division). Required: 1. Prepare a segmented income statement for Xenold, Inc., for last year. 2. Calculate Xenolds weighted average cost of capital. (Round to four significant digits.) 3. Calculate EVA for each division and for Xenold, Inc. 4. Comment on the performance of each of the divisions.
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Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of with year-end bonuses given to the divisional managers who have the highest ROIs. Operating results for the company's Office Products Division for this year are given below: Sales $22,505,000 Variable expenses 14,105,500 Contribution margin 8,399,500 Fixed expenses 6,145,000 Net operating income $2,254,500 Divisional average operating assets $4,687,500. The company had an overall return on investment () of 17.00% this year (considering all divisions). Next year the Office Products Division has an opportunity to add a new product line that would require an additional investment that would increase average operating assets by $3,261,000. The cost and revenue characteristics of the new product line per year would be: Sales $9,750,000 Variable expenses 65% of sales Fixed expenses $2,595,300. Required: Compute the Office Products Division's ROI for this year 2. Compute…
Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Retail Division Wholesale Division Operating income $ 2,750,000 $ 6,250,000 Operating assets $ 18,500,000 $ 38,500,000 Terra Company has set a target return on investment (ROI) of 14% for both divisions. Which of the following statements is accurate? Residual income for the wholesale division was $160,000. Residual income for the wholesale division was $860,000. Residual income for the retail division was $860,000. None of these answers are correct.