Bundle: Managerial Accounting, 15th + Cengagenowv2, 1 Term Printed Access Card
15th Edition
ISBN: 9781337955386
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: Cengage Learning
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Question
Chapter 10, Problem 10E
a.
To determine
Compute the
b.
To determine
Identify the most profitable division.
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Calculate return on investment (ROI) for each division using operating income as a measure of income and total assets as a measure of investment.
What are the instances that the return of investment of a division is significantly larger than the return of investment of the entire company? And, why?
A. Compute divisional operating income for the two divisions. Ignore taxes.
B-1. What are the gross margin and operating margin percentages for both divisions?
B-2. How well have these division performed?
Chapter 10 Solutions
Bundle: Managerial Accounting, 15th + Cengagenowv2, 1 Term Printed Access Card
Ch. 10 - Differentiate between centralized and...Ch. 10 - Differentiate between a profit center and an...Ch. 10 - Prob. 3DQCh. 10 - What is the major shortcoming of using operating...Ch. 10 - In a decentralized company in which the divisions...Ch. 10 - How does using the return on investment facilitate...Ch. 10 - (a) Explain how return on investment might lead a...Ch. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - When using the negotiated price approach to...
Ch. 10 - Budgetary performance for cost center Vinton...Ch. 10 - Support department allocations The centralized...Ch. 10 - Prob. 3BECh. 10 - Profit margin, investment turnover, and ROI Briggs...Ch. 10 - Residual income The Commercial Division of Galena...Ch. 10 - Prob. 6BECh. 10 - Budget performance reports for cost centers...Ch. 10 - The following data were summarized from the...Ch. 10 - For each of the following support departments,...Ch. 10 - Prob. 4ECh. 10 - Service department charges In divisional income...Ch. 10 - Varney Corporation, a manufacturer of electronics...Ch. 10 - Horton Technology has two divisions, Consumer and...Ch. 10 - Rocky Mountain Airlines Inc. has two divisions...Ch. 10 - Championship Sports Inc. operates two divisionsthe...Ch. 10 - Prob. 10ECh. 10 - The operating income and the amount of invested...Ch. 10 - Prob. 12ECh. 10 - The condensed income statement for the Consumer...Ch. 10 - The Walt Disney Company (DIS) has four business...Ch. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Materials used by the Instrument Division of...Ch. 10 - Prob. 18ECh. 10 - GHT Tech Inc. sells electronics over the Internet....Ch. 10 - Profit center responsibility reporting for a...Ch. 10 - Prob. 3PACh. 10 - Effect of proposals on divisional performance A...Ch. 10 - Divisional performance analysis and evaluation The...Ch. 10 - Prob. 6PACh. 10 - Prob. 1PBCh. 10 - Prob. 2PBCh. 10 - Prob. 3PBCh. 10 - Prob. 4PBCh. 10 - Divisional performance analysis and evaluation The...Ch. 10 - Prob. 6PBCh. 10 - Prob. 1MADCh. 10 - Prob. 2MADCh. 10 - Papa Johns International, Inc. (PZZA), operates...Ch. 10 - Panera Bread Company (PNRA) operates over 2,000...Ch. 10 - Prob. 5MADCh. 10 - Prob. 1TIFCh. 10 - Prob. 2TIFCh. 10 - Prob. 3TIFCh. 10 - The three divisions of Yummy Foods are Snack...Ch. 10 - Prob. 5TIFCh. 10 - Prob. 1CMACh. 10 - Prob. 2CMACh. 10 - Prob. 3CMACh. 10 - Morrisons Plastics Division, a profit center,...
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- Which of the following measures the profitability of a division relative to the size of its investment in capital assets? A. residual Income (RI) B. sales margin C. return on investment (ROI) D. economic value added (EVA)arrow_forwardCompute the return on investment for each divisionarrow_forwardWhy do some companies use gross book value instead of net book value to measure a division’s invested capital?arrow_forward
- REQUIRED: • Vertical Analysis • Comment on the efficiency of the firm's operation using- asset turnover, inventory turnover, and, earnings per share • Comment on the proportion of cost of sales and operating expensesarrow_forwardTrue or False. 48. Operational efficiency is measured based on the company's ability to generate sales from its utilization of assets, as a whole or individually. * 38. Horizontal analysis can be performed with the Statement of Financial Position and the Statement of Comprehensive Income. *arrow_forwardCarson Electronics’ management has long viewed BGT Electronics as an industry leader and uses this firm as a model firm for analyzing its own performance. The balance sheet and income statements for the two firms are as follows: Calculate the following ratios for both Carson and BGT: a)Total asset turnover: b) Operating profit margin: c) Operating return on assets:arrow_forward
- the dollar amount of sales needed to achieve a target operating income is computed by whatarrow_forwardIn a business where the divisions are organized as investment centers, discuss how a division that generates the largest dollar amount of profit among all divisions, could be considered the least profitableamong all divisions?arrow_forwardReturn on investment (ROI) is computed in the following manner: ROI is equal to turnover multiplied by earnings as a percent of sales. Turnover is sales divided by total investment. Total investment is current assets (inventories, accounts receivable, and cash) plus fixed assets. Earnings equal sales minus the cost of sales. The cost of sales consists of variable production costs, selling expenses, freight and delivery, and administrative costs. Complete parts a and b. a. Construct an influence diagram that relates these variables. Choose the correct diagram below. Click here to view influence diagram D. Click here to view influence diagram C. Click here to view influence diagram A. Click here to view influence diagram B. b. Develop a mathematical model using the symbols defined on the left. E: Earnings T: Turnover ROI = T = E = S: Sales TI = C = C: Cost of Sales TI: Total Investment CA: Current Assets FA: Fixed Assets PC: Prod Costs SC: Sales Expense FC: Freight and Delivery AC: Admin…arrow_forward
- Which of the following is a measure of a manager’s performance working in a profit center? a. the return on investment and residual income measures b. a balance sheet c. a budget performance report d. the divisional income statementsarrow_forwardIn evaluating the profit center manager, the operating income should be compared a.across profit centers b.to the competitor's net income c.to the total company earnings per share d.to a budgetarrow_forwardWhich of the following are not part of the components ofthe DuPont system for measuring and evaluating businessperformance?a. Return on sales.b. Residual income.c. Return on investment.d. Capital turnover.e. Number of patents.arrow_forward
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