Managerial Accounting: Creating Value in a Dynamic Business Environment
12th Edition
ISBN: 9781260417074
Author: HILTON, Ronald
Publisher: MCGRAW-HILL HIGHER EDUCATION
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Chapter 13, Problem 28E
To determine
Compute the economic value added (EVA) for each of Divisions GGCA.
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Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial
information (in thousands of dollars) for the first year of business follows:
Sales revenue
Income
Divisional assets (beginning of year)
Current liabilities (beginning of year)
R&D expendituresa
aR&D is assumed to benefit two periods. All R&D is spent at the beginning of the year.
Required:
a-1. Evaluate the performance of the two divisions assuming Lasky uses return on investment (ROI).
a-2. Which division had the better performance?
Complete this question by entering your answers in the tabs below.
Req A1
Divisions
Carolinas
$2,400
160
1,000
320
1,200
Req A2
Carolinas
Northeast
Evaluate the performance of the two divisions assuming Lasky uses return on investment (ROI).
Note: Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).
Northeast
$ 7,200
372
1,500
320
1,120
ROI
%
%
Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial
information (in thousands of dollars) for the first year of business follows:
Sales revenue
Income
Divisional assets (beginning of year)
Current liabilities (beginning of year)
R&D expendituresa
aR&D is assumed to benefit two periods. All R&D is spent at the beginning of the year.
Required:
a-1. Evaluate the performance of the two divisions assuming Lasky uses return on investment (ROI).
a-2. Which division had the better performance?
Req A1
Complete this question by entering your answers in the tabs below.
Divisions
Carolinas
$ 2,100
170
1,000
290
1,050
Req A2
Carolinas
Northeast
Northeast
$ 6,600
372
1,500
290
970
Evaluate the performance of the two divisions assuming Lasky uses return on investment (ROI).
Note: Enter your answers as a percentage rounded to 1 decimal place (i.e., 32.1).
ROI
%
%
Lasky Manufacturing has two divisions: Carolinas and Northeast. Lasky has a cost of capital of 7.5 percent. Selected financial
information (in thousands of dollars) for the first year of business follows:
Sales revenue
Income
Divisional assets (beginning of year)
Current liabilities (beginning of year)
R&D expendituresa
aR&D is assumed to benefit two periods. All R&D is spent at the beginning of the year.
Required:
a-1. Evaluate the performance of the two divisions assuming Lasky Manufacturing uses economic value added (EVA).
a-2. Which division had the better performance?
Complete this question by entering your answers in the tabs below.
Req A1
Divisions
Req A2
Carolinas
Northeast
Carolinas
$ 1,100
190
1,000
190
550
Evaluate the performance of the two divisions assuming Lasky Manufacturing uses economic value added (EVA).
Note: Note: Enter answers in thousands of dollars. Round your answers to 1 decimal place.
EVA
Chapter 13 Solutions
Managerial Accounting: Creating Value in a Dynamic Business Environment
Ch. 13 - What is the managerial accountants primary...Ch. 13 - Define goal congruence, and explain why it is...Ch. 13 - Describe the managerial approach known as...Ch. 13 - Prob. 4RQCh. 13 - Prob. 5RQCh. 13 - Prob. 6RQCh. 13 - Create an example showing how residual income is...Ch. 13 - What is the chief disadvantage of ROI as an...Ch. 13 - Why is there typically a rise in ROI or residual...Ch. 13 - Define the term economic value added. How does it...
Ch. 13 - Distinguish between the following measures of...Ch. 13 - Why do some companies use gross book value instead...Ch. 13 - Explain why it is important in performance...Ch. 13 - How do organizations use pay for performance to...Ch. 13 - Describe an alternative to using ROI or residual...Ch. 13 - Prob. 16RQCh. 13 - Prob. 17RQCh. 13 - Discuss the importance of nonfinancial information...Ch. 13 - Identify and explain the managerial accountants...Ch. 13 - Describe four methods by which transfer prices may...Ch. 13 - Explain the significance of excess capacity in the...Ch. 13 - Why might income-tax laws affect the...Ch. 13 - Prob. 23RQCh. 13 - The following data pertain to Dakota Divisions...Ch. 13 - Refer to the preceding exercise. Requited:...Ch. 13 - Refer to the data for Exercise 1324. Assume that...Ch. 13 - Golden Gate Construction Associates, a real estate...Ch. 13 - Prob. 28ECh. 13 - Prob. 29ECh. 13 - Refer to Exhibit 133. Assume that you are a...Ch. 13 - Prob. 32ECh. 13 - Prob. 33ECh. 13 - Prob. 34ECh. 13 - Prob. 35ECh. 13 - Long Beach Pharmaceutical Company has two...Ch. 13 - Prob. 37PCh. 13 - Prob. 38PCh. 13 - Long Beach Pharmaceutical Company has two...Ch. 13 - Prob. 40PCh. 13 - Prob. 41PCh. 13 - Megatronics Corporation, a massive retailer of...Ch. 13 - Prob. 43PCh. 13 - Prob. 44PCh. 13 - Prob. 45PCh. 13 - Clearview Window Company manufactures windows for...Ch. 13 - Prob. 47PCh. 13 - Alpha Communications, Inc., which produces...Ch. 13 - Prob. 49PCh. 13 - Holiday Entertainment Corporation (HHC), a...Ch. 13 - InterGlobal Industries is a diversified...Ch. 13 - Prob. 52C
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