1.
Introduction:
The margin, turnover, and return on investment (ROI) of the division.
2.
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 margin, turnover, and return on investment (ROI) of the new product line.
3.
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 margin, turnover, and return on investment (ROI) for the next year.
4.
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.
Whether the new project line should be accepted or rejected.
5.
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 reason why Company D wants Division O to accept this investment opportunity.
6 a.
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 number of excess earnings earned over and above the minimum required return of the capital invested.
The residual income of the current year.
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Chapter 11 Solutions
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- Exercise 10-9 (Algo) Return on Investment (ROI) and Residual Income Relations [LO10-1, LO10-2] A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be Indicated by a minus sign. Do not round your Intermediate calculations.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income Company A Company B Company C $ 450,000 $ 650,000 $ 610,000 $ 44,000 $ 166,000 24 % $ 155,000 19 % % 13 % % 10 % $ 51,000 $ 7,000arrow_forwardExercise 11-9 (Algo) Return on Investment (ROI) and Residual Income Relations [LO11-1, LO11-2] A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent and other amounts to whole dollars.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income $ A 470,000 $ 163,000 17% 15 % + $ $ $ Company B 760,000 40,000 16 % 59,000 % $ $ $ C 540,000 153,000 % 15 % 7,000arrow_forwardThe following information is provided. Project Income Investment A P33,000 P300,000 B P56,250 P750,000 C P27,500 P550,000 Assume the division's current ROI is 10% and the firms minimum required rate of return is 7%. If you were the president of the company, which projects would you want the division manager to accept? a. A, B and C b. A and C c. A and B d. A only e. B only.arrow_forward
- -/1 Question 4 View Policies Current Attempt in Progress ort Sunland Companyrecorded operating data for its Cheap division for the year. Sunland requires its return to be 10%. $1200000 Sales Controllable margin 180000 Total average assets 3600000 Fixed costs 100000 What is the RÓI for the year? O 33% 19% 5% O 8%arrow_forwardI'm About to Fall Asleep (AFA) has the following divisions within their company, that achieved the reported ROI's for the previous year. Division ROI A 20% B 18% C 15% AFA has been approached with a $350,000 investment opportunity. Which division will AFA choose to invest in, and how much operating income will be generated from the investment. A. AFA will invest in Division B, the investment will earn operating income of $63,000 B. AFA will invest in Division A; the investment will earn operating income of $70,000 C. AFA will invest in Division C; the investment will earn operating income of $52,500. D. AFA will invest in Division C, the investment will earn operating income of $63,000arrow_forwardExercise 11-9 (Algo) Return on Investment (ROI) and Residual Income Relations (LO11-1, LO11-2) A family frend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign. Round your percentage answers to nearest whole percent.) Company $0.330.000 $7.50.000 $ 4.5.000 Sales Net operating income 317.000 $ 190.000 Average operating sets Ratum on investment (RO0 Minimum required rate of retum Perentage Dolar amount $a10.000 Residual incomearrow_forward
- Assume the Residential Division of Kopper Faucets had the following results last year: Net sales revenue Operating income Average total assets Management's target rate of return What is the division's ROI? OA. 48% OB. 15% O C. 320% OD. 208% $ 16,000,000 2,400,000 5,000,000 15% ***arrow_forward"I know headquarters wants us to add that new product line," said Dell Havasi, manager of Billings Company's Office Products Division. "But I want to see the numbers before I make any move. Our division's return on investment (ROI) has led the company for three years, and I don't want any letdown." Billings Company is a decentralized wholesaler with five autonomous divisions. The divisions are evaluated on the basis of ROI, 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 Variable expenses Contribution margin Fixed expenses Net operating income Divisional average operating assets The company had an overall return on investment (ROI) of 15% 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…arrow_forward1. Multiplicationtable: (No need the explanation just the answer pls)A manufacturer has invested P750,000 in a new product and wants to set a price to earn a 15 percent ROI. The cost per unit is P18 and the company expects to sell 50,000 units in the first year. The company's target-return price for this product is P ______. a. 18.23 b.20.25 c.20.70 d.18.10 e.25.202. A ballpen manufacturer have the following costs and expected sales: Variable cost P 10.00 Fixed cost P300,000.00Expected unit sales 50,000 Break-even volume will be P______. a. 30,000 b. 35,000 c. 20,000 d. 25,000 3. If the cost of manufacturing a product is P30 and the item sells for P50, the markup percentage is _____ %. a. 67.7 b. 67.6 c. 66.7 d. 66.8arrow_forward
- Exercise 10-9 (Static) Return on Investment (ROI) and Residual Income Relations [LO10-1, LO10-2] A family friend has asked your help in analyzing the operations of three anonymous companies operating in the same service sector industry. Supply the missing data in the table below: (Loss amounts should be indicated by a minus sign.) Sales Net operating income Average operating assets Return on investment (ROI) Minimum required rate of return: Percentage Dollar amount Residual income Company A $ 9,000,000 $ 3,000,000 18 % 16 % Company B $ 7,000,000 $ 280,000 $ 14 % 320,000 % $ Company C 4,500,000 $ 1,800,000 $ % 15 % 90,000arrow_forwardCase 1: ROI You are comparing the performance of two (2) separate divisions, segments A and B, using ROI Analysis. A в P100,000.00 P500,000.00 30,000.00 Sales Operating Expenses 300,000.00 Net Operating income 70,000.00 200,000.00 Average Operating Assets 10,000.00 40,000.00 Required: Using ROI Analysis, which segment is performing better? To answer this question, you need to: 1. Compute the ROi of each segment and 2. Compute the components of ROI of each segmentarrow_forwardThe South Division of Wiig Company reported the following data for the current year. Sales Variable costs Controllable fixed costs Average operating assets 1. 2 $3,000,000 1,950,000 Top management is unhappy with the investment center's return on investment (ROI). It asks the manager of the South Division to submit plans to improve ROI in the next year. The manager believes it is feasible to consider the following independent courses of action. 3. 600,000 5,000,000 Increase sales by $300,000 with no change in the contribution margin percentage. Reduce variable costs by $150,000. Reduce average operating assets by 6.25%. (a) Compute the return on investment (ROI) for the current year. (Round ROI to 2 decimal places, e.g. 1.57%)arrow_forward
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