Exercise 15-15A (Algo) Residual income LO 15-7Jordan Cough Drops operates two divisions. The following information pertains to each division for the year.SalesOperating incomeAverage operating assetsCompany's desired rate of returnDivision A Division B$220,000$83,000$ 16,500$ 8,400$39,000$ 61,00013%Requireda. Compute each division's residual income.b. Which division increased the company's profitability more?a.Division ADivision Bb. The division that increased the company's profitability more is13%ResidualIncome

Residual income is the remaining income after distributing the profits to the shareholders. The…

Jordan Cough Drops operates two divisions. The following information pertains to each division for the year. Sales Operating income Average operating assets Company's desired rate of return Division A Division B $220,000 $83,000 $ 16,500 $ 8,400 $ 61,000 $39,000 13% Required a. Compute each division's residual income. b. Which division increased the company's profitability more? a. Division A Division B b. The division that increased the company's profitability more is 13% Residual Income

Jordan Cough Drops operates two divisions. The following information pertains to each division for the year. Sales Operating income Average operating assets Company's desired rate of return Division A Division B $220,000 $83,000 $ 16,500 $ 8,400 $ 61,000 $39,000 13% Required a. Compute each division's residual income. b. Which division increased the company's profitability more? a. Division A Division B b. The division that increased the company's profitability more is 13% Residual Income

Survey of Accounting (Accounting I)

8th Edition

ISBN:9781305961883

Author:Carl Warren

Publisher:Carl Warren

Chapter14: Decentralized Operations

Section: Chapter Questions

Problem 14.11E

See similar textbooks

Similar questions

Supply the missing data in the following table : Division A Division B Division C Sales P 60,000 P 75,000 P 100,000 Operating Income _______ 25,000 _______ Operating Assets 30,000 _______ P 50,000 Return on investment 15 % 10 % 20 % Minimum required rate of return 10 % _______ _______ Residual income ________ P 5,000 0 Show the solutions pls, thank you.
Supply the missing data in the following table : Division A Division B Division C Sales P 60,000 P 75,000 P 100,000 Operating Income _______ 25,000 _______ Operating Assets 30,000 _______ P 50,000 Return on investment 15 % 10 % 20 % Minimum required rate of return 10 % _______ _______ Residual income ________ P 5,000 0
QUESTION 4 The following results are available for Division X and Y:Division X Division YProfit before interest and tax P185 000 P172, 000Capital employed P1, 540, 000 P1, 650, 000 The cost of capital is 10%.Calculate and comment on the performance of the departments based on:a. Return on capital employed b. Residual income
Exercise 15-19 (Algo) Investment center analysis; ROI and residual income LO 15-9 The Northern Division of Allied Incorporated has operating income of $18,500 on sales revenue of $166,000. Divisional operating assets are $80,200, and management of Allied has determined that a minimum return of 13% should be expected from all investments. Required: a. Using the DuPont model, calculate the Northern Division's margin, turnover, and ROI. b. Calculate the Northern Division's residual income. Complete this question by entering your answers in the tabs below. Required A Required B Using the DuPont model, calculate the Northern Division's margin, turnover, and ROI. Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Margin Turnover ROI Northern Division % turns %
Exercise 9-10A Residual income Claire Cough Drops operates two divisions. The following information pertains to each division for 2010. Division A Division B Sales Operating income Average operating assets Company's desired rate of return $200,000 $ 15,040 $ 63,000 18% $72,000 $ 8,100 $45,000 18% To download more slides, ebooks, solution manual, and test bank, visit http://downloa Chapter 9 Required a. Compute each division's residual income. b. Which division increased the company's profitability more?
Question 2 Dickson Group has two divisions. The following statement shows the financial result of each division for the year ended 2020. Year 2020 Division B Division A Product type Equipment B Component A Sales volume 72,000 units 140,000 units $00 $00 Sales revenue 720,000 196,000 Variable costs (382,000)%23 (140,000) Contribution 338,000 56,000 Fixed costs 60,000 (20,000) Operating profit 278,000 36,000 # include buying components from Division A. Division A manufactures one type of component only. It sells the components to external customers and also to Division B. The following information is available: Division A Current production capacity 140,000 units Sold to Division B 72,000 units Sold to external markets 68,000 units External market demand for Component A Market price $1500 per unit 112,000 units The current policy of the group is that internal sales 72,000 units should be transferred at their opportunity cost. Consequently, some components were transferred to Division B…
Question Content Area Bentz Co. has two divisions, A and B. Invested assets and condensed income statement data for each division for the year ended December 31 are as follows: Line Item Description Division A Division B Revenues $190,000 $125,500 Operating expenses 112,500 92,750 Support department allocations 29,500 12,625 Invested assets 225,000 99,000 Question Content Area a. Prepare condensed income statements for the past year for each division. Bentz Co.Divisional Income StatementsFor the Year Ended December 31 Line Item Description Division A Division B $- Select - $- Select - - Select - - Select - $- Select - $- Select - - Select - - Select - Operating income $Operating income $Operating income Question Content Area b. Using the DuPont formula, determine the profit margin, investment turnover, and return on investment (ROI) for each division. Round the profit margin percentage to two decimal places, the…
Chapter 10 Homework 10 Sales Average operating assets Net operating income Minimum required rate of return Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division B $ 14,700,000 $ 7,350,000 $588,000 Division C $26,250,000 $ 5,250,000 $ 840,000 16% Req 1 Reg 2 Required: 1. Compute the return on investment (ROI) for each division using the formula stated in terms of margin and turnover. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 15% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity Residual income (loss) Check my work mode: This shows what is correct or incorrect for the work you have co Complete this…
Mini-Exercise 15-7 (Algo) Segmented income statement LO 8 ABC Company operates two divisions with the following sales and expense information for the month of August: DIvision 1: sales, $148,000; contribution margin ratio, 50%; direct fixed expenses, $31,000. DIvision 2: sales, $101,000; contribution margin ratio, 70%; direct fixed expenses, $19,500. ABC Company's total fixed expenses during August was $125,200. Required: Prepare a segmented income statement for ABC Company to determine the segment margin for DIVIsions 1 and 2 and the operating Income for ABC Company. Total Division 1 Division 2 Company Sales Variable expenses Contribution margin Direct fixed expenses Segment margin Common fixed expenses Operating income
Effect of proposals on divisional performance A condensed income statement for the Jet Ski Division of Amazing Rides Inc. for the year ended December 31. 20Y2, is as follows Assume that the Jet Ski Division received no charges from service departments. The president of Amazing Rides has indicated that the division's rate of return on a $15,000,000 investment must be increased to at least 12% by the end of the next year if operations are to continue. The division manager is considering the following three proposals Proposal 1: Transfer equipment with a book value of J3.000.000 to other divisions at no gain or loss and lease similar equipment. The annual lease payments would exceed the amount of depreciation expense on the old equipment by $264,000. This increase in expense would be included as part of the cost of goods sold. Sales would remain unchanged. Proposal 2: Purchase new and more efficient machining equipment and thereby reduce the cost of goods sold by $480,000. Sales would remain unchanged, and the old equipment, which has no remaining book value, would be scrapped at no gain or loss. The new equipment would increase invested assets by an additional $1,000,000 for the year. Proposal 5? Reduce invested assets by discontinuing the tandem jet ski line. This action would eliminate sales of $2,280,000, cost of goods sold of $1,400,000, and operating expenses of $463,600. Assets of $4,200,000 would be transferred to other divisions at no gain or loss. Instructions Which of the three proposals would meet the required 12% return on investment?'
Exercise 12-37 (Algo) Alternative Allocation Bases (LO 12-5) Giardin Outdoors is a recreational goods retailer with two divisions: Online and Stores. The two divisions both use the services of the corporate Finance and Accounting (F and A) Department. Annual costs of the F and A Department total $5.235 million a year. Managers in the two operating divisions are measured based on division operating profits. The following selected data are available for the two operating divisions: Online Stores Revenues ($000) $ 75,500 41,300 Transactions (000) 1,416.5 458.5 Required: a. What is the F and A cost that is charged to each division if divisional revenues are used as the allocation basis? b. What is the F and A cost that is charged to each division if the the number of transactions is used as the allocation basis?
A company's two divisions report the information below. Sales Income Average assets Electronics $ 81,000 5,670 40,500 Sporting Goods $ 40,000 4,100 25,000 Enter answers in the tabs below. Required 1 Required 2 Required 3 Calculate return on investment for each division. Division Electronics Sporting Goods Return on Investment Numerator Denominator: = Return on Investment