The Calculating Fashion Company has two operating divisions: North and South.The following information was collected from its financial statements. \[\begin{array} { | l | r | r | } \hline & \text { North } & \text { South } \\ \hline \text { Operating inc ome } & \$ 15,375 & \$ 9,160 \\ \hline \text { Sales } & 90,100 & 128,445 \\ \hline \text { Average operating assets } & 47,620 & 37,690 \\ \hline \end{array}\]Required: The South Division has a goal to increase its ROI to 30% by the end of next year.Compute the increase (decrease)required in each of the following items in order to achieve this goal.a.Operating assets b.Total costs c.Sales

a..30 = $9,160/assets;assets = $30,533,w

Seaside Enterprises has the following data for its three divisions for the year:\[\begin{array} { | l | r | r | r | } \hline & \text { SB } & \text { TH } & \text { GMA } \\ \hline \text { Revenues } & \$ 1,200,000 & \$ 3,800,000 & \$ 2,800,000 \\ \hline \text { Cost of sales } & 769,500 & 1,900,000 & 1,400,000 \\ \hline \begin{array} { l } \text { Allocated comorate } \\ \text { overhead } \end{array} & 72,000 & 228,000 & 210,000 \\ \hline \begin{array} { l } \text { Other general \& } \\ \text { administration } \end{array} & 158,500 & 1,100,000 & 1,100,000 \\ \hline \end{array}\] Required: a.Compute divisional operating income for each of the divisions.Assume taxes are 30%.b.Calculate the gross margin ratio for each division.c.Calculate the operating margin ratio for each division.d.Calculate the profit margin ratio for each division.

a. \[\begin{array} { | l | r | r | r |

Nue Wines has the following data for its three divisions for the year:\[\begin{array} { | l | r | r | r | } \hline & \text { Ein } & \text { Zwei } & \text { Drei } \\ \hline \text { Revenues } & \$ 12,000,000 & \$ 38,000,000 & \$ 28,000,000 \\ \hline \text { Cost of sales } & 7,695,000 & 19,000,000 & 14,000,000 \\ \hline \begin{array} { l } \text { Allocated } \\ \text { corporate } \\ \text { overhead } \end{array} & 720,000 & 2,280,000 & 2,100,000 \\ \hline \begin{array} { l } \text { Other general \& } \\ \text { administration } \end{array} & 1,585,000 & 11,000,000 & 11,000,000 \\ \hline \begin{array} { l } \text { Return on } \\ \text { Investment } \end{array} & 15 \% & 12 \% & 9 \% \\ \hline \end{array}\] Required: a.Compute divisional operating income for each of the divisions.Assume taxes are 35%.b.Calculate the profit margin ratio for each division.c.Calculate the asset turnover for each division.

a. \[\begin{array} { | l | r | r | r | }

La Mesa Stores has the following data for its two divisions for the year:\[\begin{array} { | l | r | r | } \hline & \text { Uno } & \text { Dos } \\ \hline \text { Revenues } & \$ 6,000,000 & \$ 18,000,000 \\ \hline \text { Cost of sales } & 3,769,500 & 9,400,000 \\ \hline \text { Allocated comorate overhead } & 400,000 & 1,200,000 \\ \hline \text { Other general \& administration } & 772,000 & 5,700,000 \\ \hline \text { Return on Investment } & 14 \% & 12 \% \\ \hline \end{array}\] Required: a.Compute divisional operating income for each of the divisions.Assume taxes are 35%.b.Calculate the profit margin ratio for each division.c.Calculate the asset turnover for each division.

a. \[\begin{array} { | l | r | r | } \

Big Sky Industries is a division of a major corporation.The following data are for the latest year of operations: \[\begin{array} { | l | r | } \hline \text { Sales } & \$ 12,700,000 \\ \hline \text { Net operating income } & \$ 1,054,100 \\ \hline \text { Average operating assets } & \$ 5,000,000 \\ \hline \text { The company's minimum required rate of } & 16 \% \\ \text { return } & \\ \hline \end{array}\] Required: a.What is the division's return on investment (ROI)? b.What is the division's residual income?

a.ROI = Net operating income ÷ Average o

The following information is available for Sweet Dreams Company: \[\begin{array} { | l | r | } \hline \text { Sales } & \$ 100,000 \\ \hline \text { Operating expenses } & \$ 94,000 \\ \hline \text { Operating assets } & \$ 40,000 \\ \hline \text { Stockholder's equity } & \$ 25,000 \\ \hline \text { Cost of capital } & 10 \% \\ \hline \end{array}\]What is Sweet Dreams Company's return on investment (ROI)?

A) 6.0%. B) 10.0%. C) 15.0%. D) 24.0%. A) 6.0%. B) 10.0%. C) 15.0%. D) 24.0%.

How will decreases in the following items affect residual income? \[\begin{array} { | l | l | l | } \hline & \text { Erpenses } & \text { Inventory } \\ \hline \text { A. } & \text { Decrease } & \text { Decrease } \\ \hline \text { B. } & \text { Decrease } & \text { Increase } \\ \hline \text { C. } & \text { Increase } & \text { Decrease } \\ \hline \text { D. } & \text { Increase } & \text { Increase } \\ \hline \end{array}\]

A) Option A B) Option B C) Option C D) Option D A) Option A B) Option B C) Option C D) Option D

Exam 14: Business Unit Performance Measurement

The Calculating Fashion Company has two operating divisions: North and South.The following information was collected from its financial statements. North South Operating inc ome \ 15,375 \ 9,160 Sales 90,100 128,445 Average operating assets 47,620 37,690 Required: The South Division has a goal to increase its ROI to 30% by the end of next year.Compute the increase (decrease)required in each of the following items in order to achieve this goal.a.Operating assets b.Total costs c.Sales

(Essay)

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Question 21

Financial data for Beaker Company for last year appear below: $Financial data for Beaker Company for last year appear below: \quad \quad \quad \quad \quad \quad Beaker Company \quad \quad \quad \quad \quad \quad Income Statement \begin{array}{|l|r|r|} \hline \text { Sales } & & \$ 414,000 \\ \hline \text { Less operating expenses } & & 351,900 \\ \hline \text { Net operating income } & & 62,100 \\ \hline \text { Less interest and taxes: } & & \\ \hline \text { Interest expense } & \$ 30,000 & \\ \hline \text { Tax expense } & 10,000 & 40,000 \\ \hline \text { Net income } & & \$ 22,100 \\ \hline \end{array} The company paid dividends of $2,100 last year.The Investment in Cedar Company on the statement of financial position represents an investment in the stock of another company.Required: a.Compute the company's margin,turnover,and return on investment for last year.b.The Board of Directors of Beaker Company has set a minimum required return of 20%.What was the company's residual income last year?$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Beaker Company $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ $\quad$ Income Statement Sales \ 414,000 Less operating expenses 351,900 Net operating income 62,100 Less interest and taxes: Interest expense \ 30,000 Tax expense 10,000 40,000 Net income \ 22,100 The company paid dividends of $2,100 last year.The "Investment in Cedar Company" on the statement of financial position represents an investment in the stock of another company.Required: a.Compute the company's margin,turnover,and return on investment for last year.b.The Board of Directors of Beaker Company has set a minimum required return of 20%.What was the company's residual income last year?

(Essay)

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Question 22

If a division is evaluated using return on investment (ROI)without regard to how assets are financed,the denominator in the ROI calculation will be:

(Multiple Choice)

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Question 23

Seaside Enterprises has the following data for its three divisions for the year: SB TH GMA Revenues \ 1,200,000 \ 3,800,000 \ 2,800,000 Cost of sales 769,500 1,900,000 1,400,000 Allocated comorate overhead 72,000 228,000 210,000 Other general \& administration 158,500 1,100,000 1,100,000 Required: a.Compute divisional operating income for each of the divisions.Assume taxes are 30%.b.Calculate the gross margin ratio for each division.c.Calculate the operating margin ratio for each division.d.Calculate the profit margin ratio for each division.

(Essay)

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Question 24

Nue Wines has the following data for its three divisions for the year: Ein Zwei Drei Revenues \ 12,000,000 \ 38,000,000 \ 28,000,000 Cost of sales 7,695,000 19,000,000 14,000,000 Allocated corporate overhead 720,000 2,280,000 2,100,000 Other general \& administration 1,585,000 11,000,000 11,000,000 Return on Investment 15\% 12\% 9\% Required: a.Compute divisional operating income for each of the divisions.Assume taxes are 35%.b.Calculate the profit margin ratio for each division.c.Calculate the asset turnover for each division.

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Question 25

Which of the following items would not be an example of an economic value added (EVA)adjustment to eliminate accounting distortions?

(Multiple Choice)

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Question 26

Edinger Industries is a division of a major corporation.The following data are for the latest year of operations: Sales \ 20,760,000 Net operating income \ 2,563,480 Average operating assets \ 6,000,000 The company's minimum required rate of return 16\% Required: What is the division's residual income?

(Essay)

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Question 27

La Mesa Stores has the following data for its two divisions for the year: Uno Dos Revenues \ 6,000,000 \ 18,000,000 Cost of sales 3,769,500 9,400,000 Allocated comorate overhead 400,000 1,200,000 Other general \& administration 772,000 5,700,000 Return on Investment 14\% 12\% Required: a.Compute divisional operating income for each of the divisions.Assume taxes are 35%.b.Calculate the profit margin ratio for each division.c.Calculate the asset turnover for each division.

(Essay)

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Question 28

A manager can always increase his/her return on investment (ROI)by:

(Multiple Choice)

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Question 29

The following information is available about the Charger Division of Weston Company.Weston requires a return of 8% from all divisions. Charger Division Earnings from operations \ 12,854,000 Charger Division Sales \ 92,500,000 Charger Division Identitiable Assets \ 156,000,000 Required: (use four decimal places in you calculation) a.Compute the ROI for the Charger Division.b.Compute the residual income for the Charger Division.

(Essay)

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Question 30

Big Sky Industries is a division of a major corporation.The following data are for the latest year of operations: Sales \ 12,700,000 Net operating income \ 1,054,100 Average operating assets \ 5,000,000 The company's minimum required rate of 16\% return Required: a.What is the division's return on investment (ROI)? b.What is the division's residual income?

(Essay)

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Question 31

A division earning a profit will increase its return on investment (ROI)if it increases operating expenses and:

(Multiple Choice)

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Question 32

Division B had an ROI last year of 15%.The division's minimum required rate of return is 10%.If the division's average operating assets last year were $450,000,then the division's residual income for last year was:

(Multiple Choice)

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Question 33

The following information is available for Sweet Dreams Company: Sales \ 100,000 Operating expenses \ 94,000 Operating assets \ 40,000 Stockholder's equity \ 25,000 Cost of capital 10\% What is Sweet Dreams Company's return on investment (ROI)?

(Multiple Choice)

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Question 34

Rex Company's sales last year totaled $150,000 and its return on investment (ROI)was 12%.If the company's turnover was 3,then its net operating income for the year must have been:

(Multiple Choice)

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Question 35

In 2016,Evans Corporation had an operating profit of $750,000 and a residual income of $300,000.If Evans' cost of capital is 15%,what is the amount of the invested capital?

(Multiple Choice)

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Question 36

Using net book values instead of gross book values to compute return on investment (ROI)might encourage an investment center manager to delay replacing inefficient assets until they are fully depreciated.

(True/False)

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Question 37

After-tax income divided by sales is called the:

(Multiple Choice)

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Question 38

The Jones Company purchased assets costing $200,000 which will be depreciated over 5-years using straight-line depreciation and no salvage value.The Jones also purchased land and other assets,which are not depreciable at a cost of $200,000.It is estimated that in 5-years,the value of these assets will be unchanged.Assume that annual cash profits are $80,000 and,for return on investment (ROI)calculations,the company uses end-of-year asset values.If sales each year average $840,000,what will be the asset turnover using gross book value?

(Multiple Choice)

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Question 39

How will decreases in the following items affect residual income? Erpenses Inventory A. Decrease Decrease B. Decrease Increase C. Increase Decrease D. Increase Increase

(Multiple Choice)

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Question 40

Showing 21 - 40 of 144

If a division is evaluated using return on investment (ROI)without regard to how assets are financed,the denominator in the ROI calculation will be:

Which of the following items would not be an example of an economic value added (EVA)adjustment to eliminate accounting distortions?

A manager can always increase his/her return on investment (ROI)by:

A division earning a profit will increase its return on investment (ROI)if it increases operating expenses and:

Division B had an ROI last year of 15%.The division's minimum required rate of return is 10%.If the division's average operating assets last year were $450,000,then the division's residual income for last year was:

The following information is available for Sweet Dreams Company: Sales \ 100,000 Operating expenses \ 94,000 Operating assets \ 40,000 Stockholder's equity \ 25,000 Cost of capital 10\% What is Sweet Dreams Company's return on investment (ROI)?

Rex Company's sales last year totaled $150,000 and its return on investment (ROI)was 12%.If the company's turnover was 3,then its net operating income for the year must have been:

In 2016,Evans Corporation had an operating profit of $750,000 and a residual income of $300,000.If Evans' cost of capital is 15%,what is the amount of the invested capital?

Using net book values instead of gross book values to compute return on investment (ROI)might encourage an investment center manager to delay replacing inefficient assets until they are fully depreciated.

After-tax income divided by sales is called the:

How will decreases in the following items affect residual income? Erpenses Inventory A. Decrease Decrease B. Decrease Increase C. Increase Decrease D. Increase Increase

Cost Accounting: Information for Decision Making

Fundamentals of Cost-Volume-Profit Analysis

Fundamentals of Cost Analysis for Decision Making

Cost Estimation

Fundamentals of Product and Service Costing

Job Costing

Process Costing

Activity-Based Costing

Fundamentals of Cost Management

Service Department and Joint Cost Allocation

Fundamentals of Management Control Systems

Planning and Budgeting

Transfer Pricing

Fundamentals of Variance Analysis

Additional Topics in Variance Analysis

Performance Measurement to Support Business Strategy

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