MANAGERIAL ACCOUNTING FUND. W/CONNECT
5th Edition
ISBN: 9781259688713
Author: Wild
Publisher: MCG
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Chapter 9, Problem 10E
To determine
Concept introduction:
Profit margin is one of the frequently used profitability ratios to measure profitability of a business activity. It depicts how much percentage of sales has converted into profits.
Investment turnover- The asset turnover ratio is a gauge of a company’scapability to use its assets to make sales or revenue, and is a calculation of the amount of sales or revenue generated per dollar of assets.
Profit margin and investment turnover for each department.
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Profit margin for an Investment center measures:
Multiple Cholce
Departmental contribution to overhead.
How efficiently an investment center generates sales from its invested assets.
Investment center income earned per dollar of sales.
Investment center income compared to target investment center income.
Investment center income generated from its invested assets.
Calculate return on investment (ROI) for each division using operating income as a measure of income and total assets as a measure of investment.
Tom and Jerry are both managers of sales teams at Flint Corp., a furniture company whose most popular item is a tweed couch. Tom
and Jerry are very competitive and each attempt to outperform one another every year. Currently, Tom's department has better
metrics, which has resulted in larger bonuses for Tom and his team. Flint Corp. evaluates both departments based upon each team's
respective return on investment and economic value added. The departments reported the following financial data during the most
recent year:
Operating Income
Sales
Average Operating Assets
Total Assets
Current Liabilities
Jerry
$125,613
$2,791,400
$953,900
$1,103,880
$208,630
Tom
$183,995
$3,679,900
$1,321,120
$1,521,480
$296,860
It should be noted that Flint uses average operating assets as its definition of investment, and it has a minimum required rate of return
of 8.72% and a tax rate of 22%. Flint has used a variety of ways to acquire capital and has the current makeup: proportion of equity is
38%, the…
Chapter 9 Solutions
MANAGERIAL ACCOUNTING FUND. W/CONNECT
Ch. 9 - Prob. 1MCQCh. 9 - Prob. 2MCQCh. 9 - Prob. 3MCQCh. 9 - Prob. 4MCQCh. 9 - 5. Using the data in question 4, Department X’s...Ch. 9 - Prob. 1DQCh. 9 - Prob. 2DQCh. 9 - Prob. 3DQCh. 9 - Prob. 4DQCh. 9 - Prob. 5DQ
Ch. 9 - Prob. 6DQCh. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - Prob. 10DQCh. 9 - Prob. 11DQCh. 9 - Prob. 12DQCh. 9 - Prob. 13DQCh. 9 - Prob. 14DQCh. 9 - Prob. 15DQCh. 9 - Prob. 16DQCh. 9 - Prob. 17DQCh. 9 - Prob. 18DQCh. 9 - Prob. 19DQCh. 9 - Prob. 20DQCh. 9 - Prob. 1QSCh. 9 - Prob. 2QSCh. 9 - Prob. 3QSCh. 9 - In each blank next to the following terms, place...Ch. 9 - Prob. 5QSCh. 9 - In each blank to the following terms, place the...Ch. 9 - Car Mart pays $130,000 rent ecah year for its...Ch. 9 - Prob. 8QSCh. 9 - Compute return on investment for each of the...Ch. 9 - Computing residual income A1 Refer to the...Ch. 9 - Prob. 11QSCh. 9 - Computing profit margin and investment turnover A2...Ch. 9 - Classify each the performance measures below into...Ch. 9 - Prob. 14QSCh. 9 - Prob. 15QSCh. 9 - Prob. 16QSCh. 9 - Prob. 17QSCh. 9 - Prob. 18QSCh. 9 - Prob. 19QSCh. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - Prob. 3ECh. 9 - Prob. 4ECh. 9 - Prob. 5ECh. 9 - Prob. 6ECh. 9 - Jansen Company reports the following for its ski...Ch. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Exercise 22-16 Performance measures-balanced...Ch. 9 - Oakwood Company produces maple bookcases to...Ch. 9 - Best Ink produces ink-jet printers for personal...Ch. 9 - The trailer division of Baxter Bicycles makes bike...Ch. 9 - Prob. 19ECh. 9 - Prob. 20ECh. 9 - Prob. 21ECh. 9 - Prob. 1PSACh. 9 - National Bank has several departments that occupy...Ch. 9 - Prob. 3PSACh. 9 - Prob. 4PSACh. 9 - Prob. 5PSACh. 9 - Prob. 1PSBCh. 9 - Harmons has several departments that occupy all...Ch. 9 - Prob. 3PSBCh. 9 - Sadar Company operates a store with two...Ch. 9 - Prob. 5PSBCh. 9 - Santana Reys two departments, computer consulting...Ch. 9 - Prob. 1BTNCh. 9 - Prob. 2BTNCh. 9 - Prob. 3BTNCh. 9 - Prob. 4BTNCh. 9 - Prob. 5BTNCh. 9 - Prob. 6BTNCh. 9 - Brian Lintons company, United By Blue, sells...Ch. 9 - Prob. 8BTNCh. 9 - Prob. 9BTN
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- Return on investment (ROI) is computed in the following manner: ROI is equal to turnover multiplied by earnings as a percent of sales. Turnover is sales divided by total investment. Total investment is current assets (inventories, accounts receivable, and cash) plus fixed assets. Earnings equal sales minus the cost of sales. The cost of sales consists of variable production costs, selling expenses, freight and delivery, and administrative costs. Complete parts a and b. a. Construct an influence diagram that relates these variables. Choose the correct diagram below. Click here to view influence diagram D. Click here to view influence diagram C. Click here to view influence diagram A. Click here to view influence diagram B. b. Develop a mathematical model using the symbols defined on the left. E: Earnings T: Turnover ROI = T = E = S: Sales TI = C = C: Cost of Sales TI: Total Investment CA: Current Assets FA: Fixed Assets PC: Prod Costs SC: Sales Expense FC: Freight and Delivery AC: Admin…arrow_forwardCOMPUTING OPERATING INCOME The sales, cost of goods sold, and total operating expenses of departments A and B of Ash Company are as follows: Compute the departmental operating income for each department.arrow_forwardInstructions: Designate the best answer for each of the following questions. 1.Which of the following is a responsibility center that incurs expenses, generates revenues, and is responsible for generating a return on assets? a. Cost center b. Revenue center c. Profit center d. Investment center 2.Which one of the following is the most useful measure for evaluating a manager's performance in controlling revenues and costs in a profit center? a. Contribution margin b. Contribution net income c. Contribution gross profit d. Controllable margin 3.Hanover Corporation desires to earn target net income of $42,000. The selling price per unit is $18, unit variable cost is $5.60, and total fixed costs are $123,912. How many units must the company sell to earn its target net income? a. 13,380 b. 9,993 c. 3,387 d. 9,217 4.Remark…arrow_forward
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