CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
6th Edition
ISBN: 9781264445356
Author: Noreen
Publisher: MCG
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Chapter 11, Problem 11.14E
1.
To determine
Introduction:
The margin, turnover, and return on investment (ROI) for Division A, Division B, and Division C.
2.
To determine
Introduction: A business performance measurement that takes into account the minimum required return on the asset employed is a residual income, which the company expects from the asset in which the investment has been made. In the other words, residual income is the amount of excess earnings earned over and above the minimum required return of the capital invested.
The residual income of Division A, Division B, and Division C.
3 a.
To determine
Introduction: Return on investment or asset establishes the relationship between the net income and the assets or capital employed. The ratio is used to measure the overall performance of an organization by looking at how efficiently an organization uses its resources.
The division or divisions will probably accept or reject the opportunity if performance is being measured by ROI.
3 b.
To determine
Introduction: A business performance measurement that takes into account the minimum required return on the asset employed is a residual income, which the company expects from the asset in which the investment has been made. In the other words, residual income is the amount of excess earnings earned over and above the minimum required return of the capital invested.
The division or divisions will probably accept or reject the opportunity if performance is being measured by Residual Income.
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B
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Investment
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A
B
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Center
Use the information in the table above to compute each department's contribution to overhead (both in dollars and as a percent).
(Round your final answers to 2 decimal places.)
Return on investment:
A
B
Choose Numerator:
Choose Numerator:
1
A
1
$
$ 584,600
$1,580,000
?
1
10%
?
?%
B
$12,200,000
$
$
1 Choose Denominator:
Choose Denominator:
1 Choose Denominator:
?
?
?%
1.3
13%
=
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Profit margin
10.00 %
%
= Investment Turnover
= Investment turnover
1.30
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Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two
divisions follow:
Division
Osaka Yokohama
$ 10,600,000 $ 36,000,e00
24
742,000 $ 3,240,000
2$
2,650,000
Sales
Net operating income
Average operating assets
$ 18,000,000
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.
Complete this question by entering your answers in the tabs below.
Required 1
Required 2
For each division, compute the return on investment (ROI) in terms of margin and turnover.
7:32 PM
4/15/2021
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The vice president of operations of Moab Bike Company is evaluating the
performance of two divisions organized as investment centers. Invested assets and
condensed income statement data for the past year ending October 31, 20Y9, for
each division are as follows: (P14-5)
Touring Bike Division
Trail Bike Division
Sales
$1,500,000
$5,00
Cost of goods sold
Operating expenses
Invested assets
900,000
4,000,000
495,000
968,000
750,000
3,600,000
Instructions
1. Prepare condensed divisional income statements for the year ended October 31,
20Y9, assuming that there were no service department charges.
Touting Bike Division
Trial Bike Division
Chapter 11 Solutions
CONNECT ONLINE ACCESS F/MANAGERIAL ACC.
Ch. 11 - Prob. 11.1QCh. 11 - Prob. 11.2QCh. 11 - Prob. 11.3QCh. 11 - Prob. 11.4QCh. 11 - Prob. 11.5QCh. 11 - Prob. 11.6QCh. 11 - Prob. 11.7QCh. 11 - Prob. 11.8QCh. 11 - Prob. 11.9QCh. 11 - Why is using sales dollars as an allocation base...
Ch. 11 - Prob. 1AECh. 11 - Prob. 1TF15Ch. 11 - Prob. 11.1ECh. 11 - Prob. 11.2ECh. 11 - Prob. 11.3ECh. 11 - Prob. 11.4ECh. 11 - Prob. 11.5ECh. 11 - Prob. 11.6ECh. 11 - Prob. 11.7ECh. 11 - Prob. 11.8ECh. 11 - Prob. 11.9ECh. 11 - Prob. 11.10ECh. 11 - Prob. 11.11ECh. 11 - Prob. 11.12ECh. 11 - Prob. 11.13ECh. 11 - Prob. 11.14ECh. 11 - Prob. 11.15ECh. 11 - Prob. 11.16ECh. 11 - Prob. 11.17PCh. 11 - Prob. 11.18PCh. 11 - Prob. 11.19PCh. 11 - Prob. 11.20PCh. 11 - Prob. 11.21PCh. 11 - Service Department Charges LO 11–4 Sharp Motor...Ch. 11 - Prob. 11.23PCh. 11 - Prob. 11.24PCh. 11 - Basic Transfer Pricing LO 11–3 Alpha and Beta...Ch. 11 - Prob. 11.26C
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