Introduction To Managerial Accounting
8th Edition
ISBN: 9781259917066
Author: BREWER, Peter C., Garrison, Ray H., Noreen, Eric W.
Publisher: Mcgraw-hill Education,
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Textbook Question
Chapter 10, Problem 11E
Effects of Charges in Profits arid Assets on
Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on return on investment (ROI). The company's Springfield Club reported the following results for the past year:
Required:
The following questions are to be considered independently. Carry out all computations to two decimal places.
1. Compute the Springfield club's return on investment (ROI).
2. Assume that the manager of the club is able to increase sales by $70,000 and that as a result, net operating income increases by $18,200. Further assume that this is possible without any increase in average operating assets. What would be the club's return on investment (ROI)?
3. Assume that the manager of the club is able to reduce expenses by $14:000 without any change in sales or average operating assets. What would be the club's return on investment (ROI)?
4. Assume that the manager of the club is able to reduce average operating assets by $70:000 without any change in sales or net operating income. What would be the club's return on investment (ROI)?
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Effects of Changes in Profits and Assets on Return on Investment (ROI)
Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as needed, are evaluated based largely on return on investment (ROI). The company’s Springfield Club reported the following results for the past year:
Required:
The following questions are to be considered independently. Carry out all computations to two decimal places.
1. Compute the Springfield club’s return on investment (ROI).
2. Assume that the manager of the club is able to increase sales by $70,000 and that, as a result, net operating income increases by $18,200. Further assume that this is possible without any increase in average operating assets. What would be the club’s return on investment (ROI)?
3. Assume that the manager of the club is able to reduce expenses by $14,000 without any change in sales or average operating assets. What would be the club’s return on investment (ROI)?
4.…
Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as
needed, are evaluated based largely on return on investment (ROI). The company's Springfield Club reported the following
results for the past year:
Sales
Net operating income
Average operating assets
720,000
$ 12,240
$
100,000
The following questions are to be considered independently.
Assume that the manager of the club is able to reduce expenses by $2,880 without any change in sales or average operating
assets. What would be the club's return on investment (ROI)?
Fitness Fanatics is a regional chain of health clubs. The managers of the clubs, who have authority to make investments as
needed, are evaluated based largely on return on investment (ROI). The company's Springfield Club reported the following
results for the past year:
Sales
Net operating income
Average operating assets
$ 720,000
12,240
$ 100,000
The following questions are to be considered independently.
4. Assume that the manager of the club is able to reduce average operating assets by $20,000 without any change in sales or net
operating income. What would be the club's return on investment (ROI)?
Chapter 10 Solutions
Introduction To Managerial Accounting
Ch. 10 - What is meant by the term decentralization?Ch. 10 - What benefits result from decentralization?Ch. 10 - Distinguish between a cost center, a profit...Ch. 10 - What is meant by the terms margin and turnover in...Ch. 10 - Prob. 5QCh. 10 - In what way can the use of ROI as a performance...Ch. 10 - What is the difference between delivery cycle tame...Ch. 10 - What does a manufacturing cycle efficiency (MCE)...Ch. 10 - Prob. 9QCh. 10 - Prob. 10Q
Ch. 10 - Prob. 1AECh. 10 - Prob. 2AECh. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Prob. 6F15Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Prob. 9F15Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Westerville Company reported the following result...Ch. 10 - Compute the Return or Investment (ROI) Alyeska...Ch. 10 - Residual Income Jumper Design Lid of Manchester....Ch. 10 - Measures of Internal Business Process Performance...Ch. 10 - Building a Balanced Scorecard Lost Peak ski resort...Ch. 10 - Return on Investment (ROI) Provide the missing...Ch. 10 - Prob. 6ECh. 10 - Creating a Balanced Scorecard Ariel Tax Services...Ch. 10 - Computing and Interpreting Return on Investment...Ch. 10 - Return on Investment (ROI) and Residual Income...Ch. 10 - Cost-Volume-Profit Analysis and Return on...Ch. 10 - Effects of Charges in Profits arid Assets on...Ch. 10 - Prob. 12ECh. 10 - Effects of Changes in Sales, Expenses, and Assets...Ch. 10 - Measures of Internal Business Process Performance...Ch. 10 - Prob. 15PCh. 10 - Creating a Balanced Scorecard Mason Paper Company...Ch. 10 - Comparison of Performance Using Return on...Ch. 10 - Return on Investment (ROI) and Residual Income "I...Ch. 10 - Internal Business Process Performance Measures...Ch. 10 - Return on Investment (ROI) Analysis The...Ch. 10 - Creating Balanced Scorecards that Support...Ch. 10 - Prob. 22P
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