Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
14th Edition
ISBN: 9781337541398
Author: Carl Warren; James M. Reeve; Jonathan Duchac
Publisher: Cengage Learning
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Chapter 9, Problem 3PA
(1)
To determine
Prepare the income statements for C, SC, and RB Divisions of Company CG for the year ended June 30, 20Y7
(2)
To determine
Ascertain the Profit margin, investment turnover, and return on investment of C, SC, and RB Divisions
(3)
To determine
Recommend the expansion of the profitable division, based on income from operations and ROI, computed in parts (1) and (2)
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Road Bike Division
Mountain Bike Division
4. On the basis of operating income, the
residual income, the
Residual Income
Division is the more profitable of the two divisions. However, operating income
Division is the more profitable of the two divisions.
consider the amount of invested assets in each division. On the basis of
2. Using the DuPont formula, determine the profit margin, investment turnover, and
return on investment for each division. (Round to 2nd decimal places).
3. If management desires a minimum acceptable rate of return of 8%, determine the
residual income for each division.
4. Discuss the evaluation of the two divisions, using the performance measures
determined in parts (1), (2), and (3).
Divisional Performance Analysis and Evaluation
The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Investe
assets and condensed income statement data for the past year for each division are as follows:
Sales
Cost of goods sold
Operating expenses
Invested assets
Required:
Road Bike Division
$ 5,610,000
2,468,000
2,076,100
5,100,000
Mountain Bike Division
$ 5,880,000
2,764,000
1,763,600
4,200,000
1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no service department
charges.
Free Ride Bike Company
Divisional Income Statements
For the Year Ended December 31, 20Y7
Road Bike Division Mountain Bike Division
Sales
Cost of goods sold
Gross profit
Operating expenses
Income from operations
Chapter 9 Solutions
Bundle: Managerial Accounting, Loose-leaf Version, 14th - Book Only
Ch. 9 - Differentiate between centralized and...Ch. 9 - Differentiate between a profit center and an...Ch. 9 - Prob. 3DQCh. 9 - What is the major shortcoming of using operating...Ch. 9 - In a decentralized company in which the divisions...Ch. 9 - How does using the return on investment facilitate...Ch. 9 - Prob. 7DQCh. 9 - Prob. 8DQCh. 9 - Prob. 9DQCh. 9 - When using the negotiated price approach to...
Ch. 9 - Budgetary performance for cost center Vinton...Ch. 9 - Support department allocations The centralized...Ch. 9 - Prob. 3BECh. 9 - Profit margin, investment turnover, and ROI Briggs...Ch. 9 - Residual income The Commercial Division of Galena...Ch. 9 - Prob. 6BECh. 9 - Prob. 1ECh. 9 - Prob. 2ECh. 9 - For each of the following support departments,...Ch. 9 - Prob. 4ECh. 9 - Service department charges In divisional income...Ch. 9 - Service department charges and activity bases...Ch. 9 - Prob. 7ECh. 9 - Prob. 8ECh. 9 - Prob. 9ECh. 9 - Prob. 10ECh. 9 - Prob. 11ECh. 9 - Prob. 12ECh. 9 - Prob. 13ECh. 9 - Prob. 14ECh. 9 - Prob. 15ECh. 9 - Prob. 16ECh. 9 - Prob. 17ECh. 9 - Prob. 18ECh. 9 - Prob. 19ECh. 9 - Prob. 20ECh. 9 - Prob. 1PACh. 9 - Profit center responsibility reporting for a...Ch. 9 - Prob. 3PACh. 9 - Effect of proposals on divisional performance A...Ch. 9 - Divisional performance analysis and evaluation The...Ch. 9 - Prob. 6PACh. 9 - Prob. 1PBCh. 9 - Prob. 2PBCh. 9 - Prob. 3PBCh. 9 - Prob. 4PBCh. 9 - Prob. 5PBCh. 9 - Prob. 6PBCh. 9 - Prob. 1ADMCh. 9 - Prob. 2ADMCh. 9 - Prob. 3ADMCh. 9 - Prob. 1TIFCh. 9 - Prob. 2TIFCh. 9 - Communication The Norse Division of Gridiron...
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