INTRO TO MANAGERIAL ACCT-CONNECT ACCESS
8th Edition
ISBN: 9781260118742
Author: BREWER
Publisher: MCG
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Chapter 10, Problem 6E
To determine
Calculating Margin, Turnover and Return of Income for Division: In order to find the performance of a department, Parameters such as Margin, Turnover and return of income are used- Margin: This is a ratio of Net Income to Sales, Turnover: This is a Ratio of Sales to Assets and Return of Income: This is a Ratio of Net Income to Assets.
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Meiji Isetan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two
divisions follow:
Sales
Net operating income.
Average operating assets.
Required 1 Required 2
Required:
1. For each division, compute the return on investment (ROI) in terms of margin and turnover.
2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any
division is 12%. Compute the residual income for each division.
3. Is Yokohama's greater amount of residual income an indication that it is better managed?
Complete this question by entering your answers in the tabs below.
ROI
Osaka
$ 9,100,000
$ 455,000
$ 2,275,000
Osaka
%
Division
Required 3
For each division, compute the return on investment (ROI) in terms of margin and turnover.
Yokohama
$ 21,000,000
$ 1,470,000
$ 10,500,000
Yokohama
%
Meiji Isetan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two
divisions follow:
Sales
Net operating income
Average operating assets
Required 1 Required 2
Required:
1. For each division, compute the return on investment (ROI) in terms of margin and turnover.
2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any
division is 16%. Compute the residual income for each division.
3. Is Yokohama's greater amount of residual income an indication that it is better managed?
Osaka
$ 10,600,000
$ 742,000
$ 2,650,000
Complete this question by entering your answers in the tabs below.
ROI
%
Division
Required 3
For each division, compute the return on investment (ROI) in terms of margin and turnover.
Osaka
Yokohama
Yokohama
$ 36,000,000
$ 3,240,000
$ 18,000,000
%
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions
follow:
Sales
Net operating income
Average operating assets
Required 1 Required 2
Required:
1. For each division, compute the return on investment (ROI).
2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any
division is 17%. Compute the residual income for each division.
Complete this question by entering your answers in the tabs below.
ROI
Osaka
$ 10,100,000
$ 808,000
$ 2,525,000
Osaka
Division
For each division, compute the return on investment (ROI).
%
Yokohama
$ 31,000,000
$ 3,100,000
$ 15,500,000
Yokohama
%
Chapter 10 Solutions
INTRO TO MANAGERIAL ACCT-CONNECT ACCESS
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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- A multinational corporation has a number of divisions, two of which are the North American Division and the Pacific Rim Division. Data on the two divisions are as follows: Round all rates of return to four significant digits. Required: 1. Compute residual income for each division. By comparing residual income, is it possible to make a useful comparison of divisional performance? Explain. 2. Compute the residual rate of return by dividing the residual income by the average operating assets. Is it possible now to say that one division outperformed the other? Explain. 3. Compute the return on investment for each division. Can we make meaningful comparisons of divisional performance? Explain. 4. Add the residual rate of return computed in Requirement 2 to the required rate of return. Compare these rates with the ROI computed in Requirement 3. Will this relationship always be the same?arrow_forwardRefer to the data given in Exercise 10.8. Required: 1. Compute the residual income for each of the opportunities. (Round to the nearest dollar.) 2. Compute the divisional residual income (rounded to the nearest dollar) for each of the following four alternatives: a. The Espresso-Pro is added. b. The Mini-Prep is added. c. Both investments are added. d. Neither investment is made; the status quo is maintained. Assuming that divisional managers are evaluated and rewarded on the basis of residual income, which alternative do you think the divisional manager will choose? 3. Based on your answer in Requirement 2, compute the profit or loss from the divisional managers investment decision. Was the correct decision made?arrow_forwardContrasting Return on Investment (ROI) and Residual Income Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. Where necessary, carry computations to two decimal places. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division. 3. Is Yokohama’s greater amount of residual income an indication that it is better managed? Explain.arrow_forward
- Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Required 1 Required 2 Required: 1. For each division, compute the return on investment (ROI). 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 18%. Compute the residual income for each division. Complete this question by entering your answers in the tabs below. ROI Osaka $ 9,400,000 $ 752,000 $ 2,350,000 Osaka Division For each division, compute the return on investment (ROI). % Yokohama $ 24,000,000 $ 2,400,000 $8,000,000 Yokohama %arrow_forwardTan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Set operating income. Average operating assets Required: 1. For each division, compute the return on investment (ROI). 2. Compute the residual income for each division assuming the company's minimum required rate of return is 16%. Complete this question by entering your answers in the tabs below. Division Osaka Yokohana $9,600,000 $ 26,000,000 $672,000 $2,340,000 $3,200,000 $ 13,000,000 Required 1 Required 2 For each division, compute the return on investment (ROI). RO Osaka Yokohama Required Required 2 >arrow_forwardSelected sales and operating data for three divisions of different structural engineering firms are given as follows: 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 7% 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? Division A Division B Division C Sales $ 15,950,000 $ 28,760,000 $ 25,950,000 Average operating assets $ 3,190,000 $ 7,190,000 $ 5,190,000 Net operating income $ 733,700 $ 373,880 $ 752,550 Minimum required rate of return 6.00 % 6.50 % 14.50 %arrow_forward
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