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School
Brock University *
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Course
3413
Subject
Finance
Date
Nov 24, 2024
Type
png
Pages
1
Uploaded by MateResolve7874
Sleepy
Owl
Company
allows
its
divisions
to
operate
as
autonomous
units.
Their
results
for
the
current
year
were
as
follows:
Required:
a.
b.
c.
d
Pillow
Blanket
Bed
Sheet
Revenues
$2,250,000
|
$500,000
|
$4.,800,000
Current
assets
800,000
152,500
1,435,000
Capital
assets
1,000,000
|
400,000
1,750,000
Current
liabilities
350,000
75,000
540,000
Net
operating
income
220,000
60,000
480,000
After-tax
income
143,000
39,000
312,000
Weighted
average
cost
of
capital
|
8.5%
8.5%
8.5%
Return
on
sales
Return
on
investment
based
on
total
assets
employed
Economic
value
added
Residual
income
based
on
net
operating
income
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Samson chemical corporation has three divisions solve this question
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East Division
West Division
Revenues
$1,200,000
$800,000
Operating expenses
950,000
640,000
Service department charges
145,000
72,000
Invested assets
800,000
500,000
(a)
Prepare condensed income statements for the past year for each division.
(b)
Using the expanded expression, determine the profit margin, investment turnover, and rate of return on investment for each division. Round to one decimal place.
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Consider the following data for three divisions of a company, X, Y, and Z:
Divisional:
X
Y
Z
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$
1,431,000
$
942,000
$
4,792,000
Operating Income
214,300
124,300
230,000
Investment in assets
557,200
596,600
2,587,500
The asset turnover (AT) for Division X is (rounded):
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Consider the following data for three divisions of a company, X, Y, and Z:
Divisional: X Y Z
Sales $ 1,350,000 $ 940,000 $ 4,869,000
Operating Income 139,100 98,800 225,300
Investment in assets 272,900 434,400 3,253,200
The asset turnover (AT) for Division Y is calculated to be (rounded):
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PDT Co. has two divisions, East and West. Invested assets and condensed income statement data for each division for the past year ended December 31 are as follows:
East Division
West Division
Revenues
$1,200,000
$800,000
Operating expenses
950,000
640,000
Service department charges
145,000
72,000
Invested assets
800,000
500,000
a. Prepare condensed income statements for the past year for each division.
PDT Co.
Divisional Income Statements
For the Year Ended December 31, 20--
East Division
West Division
Revenues
Operating expenses
X
Operating income before service department charges
X
Service department charges
X
Operating income
b. Using the expanded expression, determine the profit margin, investment turnover, and rate of return on investment for each division. Round your answers to two decimal places and do not enter the percent sign (for example, enter 10.25% as
"10.25").
East Division
West Division
Profit margin
X %
X %
Investment turnover
Rate of return on investment
X %
X %
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The sales, income from operations, and invested assets for each division of Wren Company are as follows:
Division c
Division D
Division E
Sales
$5,000,000
6,800,000
3,750,000
Income from
Operations
$630,000
760,000
750,000
Invested
Assets
$4,000,000
3,900,000
7,500,000
Management has established a minimum rate of return for invested assets of 8%.
a. Determine the residual income for each division.
Division C:
Division D:
Division E:
b. Based on residual income, which of the divisions is the most profitable?
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The sales, operating income, and invested assets for each division of Salem Company are as follows:
Sales
OperatingIncome
InvestedAssets
Division C
$4,000,000
$410,000
$3,500,000
Division D
3,500,000
600,000
4,000,000
Division E
2,250,000
780,000
7,000,000
Management has established a minimum rate of return for invested assets of 11%.
a. Determine the residual income for each division.
Residual Income
Division C
$fill in the blank 1
Division D
$fill in the blank 2
Division E
$fill in the blank 3
b. Based on residual income, which division is the most profitable?
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Dacker Products is a division of a major corporation. The following data are for the most recent year of operations:
Sales
Net operating income
Average operating assets
$ 36,880,000
$ 3,008,960
$ 8,400,000
The company's minimum required rate of return
The division's residual income is closest to:
Multiple Choice
$4,268,960
$(3,227,840)
○ $3,008,960
○ $1,748,960
$ 15%
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Mesopotamian Materials Inc. (MMI) has two decentralized divisions (Ur and Babylon) that have decision making responsibility over the amount of resources invested in their divisions. Recent financial extracts for both divisions are presented below:
Ur
Babylon
Fixed assets, gross
$2,500
$4,000
Accumulated depreciation
$1,500
$1,200
Other assets
$500
$750
Liabilities
$500
$1,000
Sales
$6,750
$7,200
Net income after tax*
$743
$1,008
Average age of fixed assets (years)
15
5
*Net income is after tax but before interest MMI's weighted average cost of capital (WACC) is 11.5%. The MMI measures division performance based on the book value of net assets. The producer price index 15 years ago was 100, 116 five years ago, and currently is 125. Which is true, when fixed asset costs are adjusted upward for inflation?
Babylon's RONA is 35.8%
Babylon's RONA is 26.3%
Ur's depreciation expense increases by $19 more than…
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Mesopotamian Materials Inc. (MMI) has two decentralized divisions (Ur and Babylon) that have decision making responsibility over the amount of resources invested in their divisions. Recent financial extracts for both divisions are presented below:
Ur
Babylon
Fixed assets, gross
$2,500
$4,000
Accumulated depreciation
$1,500
$1,200
Other assets
$500
$750
Liabilities
$500
$1,000
Sales
$6,750
$7,200
Net income after tax*
$743
$1,008
Average age of fixed assets (years)
15
5
*Net income is after tax but before interest MMI's weighted average cost of capital (WACC) is 11.5%. The MMI measures division performance based on the book value of net assets. The producer price index 15 years ago was 100, 116 five years ago, and currently is 125. Which is true, when fixed asset costs are adjusted upward for inflation?
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1)
Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period:
Total Company
Southern Division
Northern Division
Sales
$
418,000
$
193,000
$
225,000
Variable expenses
$
130,880
$
79,130
$
51,750
Traceable fixed expenses
$
186,000
$
77,000
$
109,000
Common fixed expense
$
79,420
$
36,670
$
42,750
The common fixed expenses have been allocated to the divisions on the basis of sales. The company's overall break-even sales is closest to:
A
$114,341
B
$328,299
C
$272,067
D
$386,408
2)
Schister Systems uses the following data in its Cost-Volume-Profit analyses:
Total
Sales
$
395,000
Variable expenses
197,500
Contribution margin
197,500
Fixed expenses
119,000
Net operating income
$
78,500
What is total contribution margin if sales volume increases by 20%?
A
$94,200
B
$237,000
C
$62,800…
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Maniraguha, Incorporated
eastern Division
western Division
central Division
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$ 320,000
$ 355,000
$ 445,000
Variable operating expenses
626,000
176,000
195,000
255,000
Controllable fixed expenses
255,000
80,000
90,000
85,000
Noncontrollable fixed expenses
105,000
30,000
35,000
40,000
In addition, the company incurred common fixed costs of $22,500.
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Net operating income
1.738.000
average operating assets
6,000
rate of return
16%
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Operating Expenses 3,800,000 3,000,000
Operating Profit $1,200,000 $1,500,000
Invested Assets $6,000,000 $8,000,000
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b. The company is planning to invest an additional $600,000 in assets in one or the other of the divisions. Which division should the company expand? Why?
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Neelon Corporation has two divisions: Southern Division and Northern Division. The following data are for the most recent operating period:
Sales
Variable expenses
Traceable fixed expenses
Common fixed expense
Total
Company
Southern
Division
$ 418,000 $ 193,000
$ 130,880 $ 79,130
$ 186,000 $ 77,000
$ 79,420 $ 36,670
Northern
Division
$ 225,000
$ 51,750
$ 109,000
$ 42,750
The common fixed expenses have been allocated to the divisions on the basis of sales.
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Multiple Choice
$(79,420)
$21,700
$(265,420)
$0
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Operating
Invested
Sales
Income
Assets
Division E
$3,000,000
$470,000
$2,500,000
Division F
3,600,000
430,000
2,400,000
Division G
6,000,000
560.000
3,000,000
a. Using the expanded expression, determine the profit margin, investment turnover, and rate of return on investment for each division. Round to one decimal place.
Division E
Division F
Division G
Profit margin
X %
X %
X %
Investment turnover
Rate of return on investment
X %
X %
X %
b. Which division is the most profitable as per dollar invested?
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Sales revenue
Income
Divisional assets (beginning of year)
Current liabilities (beginning of year)
R&D expendituresa
Carolinas
$ 1,500
190
Northeast
$ 5,400
1,000
230
372
1,500
230
750
670
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
Req A2
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).
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(J)
Selected sales and operating data for three divisions of different structural engineering firms are given as follows:
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1. Compute the margin, turnover, and return on investment (ROI) for each division.
2. Compute the residual income (loss) for each division.
3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return.
a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity?
b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity
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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:
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
a. Prepare condensed income statements for the past year for each division.
Deferred expense
Invested assets
Operating income before support department allocations
Revenues
Support department allocations
Bentz Co.
Divisional Income Statements
For the Year Ended December 31
Division A
Division B
$fill in the blank 9c7615fbffbd07a_2
$fill in the blank 9c7615fbffbd07a_3
fill in the blank 9c7615fbffbd07a_5
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$fill in the blank 9c7615fbffbd07a_8
$fill in the blank 9c7615fbffbd07a_9
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Divisional income statements and return on investment analysis
E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data
taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows:
Fee revenue
Operating
expenses
Invested
assets
Required:
Electronic
Investment
Mutual Fund Brokerage
Banking
Division
Division
Division
$1,090,000 $1,130,000 $1,080,000
586,000
4,000,000 3,300,000
The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.
Line Item Description
Fee revenue
Operating expenses
Operating income
Division
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations.
E.F. Lynch Company
Divisional Income Statements
For the Year Ended June 30, 20Y8
476,600
Mutual Fund Division
Electronic Brokerage
Division
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Check My Work
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answer in text form please (without image)
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Divisional income statements for the year 2020 for the two divisions of a company appear below.
Eastern Division Western Division
Sales $5,000,000 $4,500,000
Operating Expenses 3,800,000 3,000,000
Operating Profit $1,200,000 $1,500,000
Invested Assets $6,000,000 $8,000,000
1. Based on the data above, compute the ROI for the Eastern Division and the Western Division. Please use the Du Pont Model. Show all work and round to second decimal places.
2. The company is planning to invest an additional $600,000 in assets in one or the other of the divisions. Which division should the company expand? Why?
3. What is the…
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The operating income and the amount of invested assets in each division of Conley Industries are as follows:
Retail Division
Commercial Division
Internet Division
Operating income
Invested Assets
$160,600
$730,000
120,000
600,000
124,200
690,000
Assume that management has established a 8% minimum acceptable return for invested assets.
a. Determine the residual income for each division.
Operating income
Minimum acceptable operating income as a percent of invested assets
Residual income
b. Which division has the most residual income?
Retail Division
Retail Division
Commercial Division
Internet Division
$160,600
$120,000
$124,200
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