4. Return on Investment, Residual Income & ROI PricingFor each of the following independent cases, the minimum desired Return on Investment (ROI) is 20%.Division LBMP 700,000P 42,000(5)(6)(7).(8)P 22,000SalesOperating IncomeOperating AssetsMarginTurnoverReturn on InvestmentsResidual IncomeDivision LugawP 400,000(1).(2)15%(3).30%(4).Division LugawUnit selling price: P 20Total fixed costs: P 100,000Division LBM• Unit selling price: P 700Total fixed costs: P 258,000REQUIRED:1. Compute for each division's missing items (1) to (8).2. How many more units shall be sold by Lugaw to achieve a 40% ROI?3. How much increase in selling price will allow LBM to reach 50% ROI from its current unit sales?

Return on Investments: How much an investor will make relative to the cost of their investment is…

4. Return on Investment, Residual Income & ROI Pricing For each of the following independent cases, the minimum desired Return on Investment (ROI) is 20%. Division LBM Sales Operating Income Operating Assets Margin Turnover Return on Investments Residual Income Division Lugaw P 400,000 (1). (2). 15% (3). 30% (4). P 700,000 P 42,000 (5) (6) (7). (8) P 22,000 Division Lugaw • Unit selling price: P 20 Total fixed costs: P 100,000 Division LBM Unit selling price: P 700 Total fixed costs: P 258,000 REQUIRED: 1. Compute for each division's missing items (1) to (8). 2. How many more units shall be sold by Lugaw to achieve a 40% ROI? 3. How much increase in selling price will allow LBM to reach 50% ROI from its current unit sales?

4. Return on Investment, Residual Income & ROI Pricing For each of the following independent cases, the minimum desired Return on Investment (ROI) is 20%. Division LBM Sales Operating Income Operating Assets Margin Turnover Return on Investments Residual Income Division Lugaw P 400,000 (1). (2). 15% (3). 30% (4). P 700,000 P 42,000 (5) (6) (7). (8) P 22,000 Division Lugaw • Unit selling price: P 20 Total fixed costs: P 100,000 Division LBM Unit selling price: P 700 Total fixed costs: P 258,000 REQUIRED: 1. Compute for each division's missing items (1) to (8). 2. How many more units shall be sold by Lugaw to achieve a 40% ROI? 3. How much increase in selling price will allow LBM to reach 50% ROI from its current unit sales?

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Required Supply the missing information in the following table for Vernon Company. (Do not round intermediate calculations. Round "ROI" answer to 2 decimal places. (i.e., 0.2345 should be entered as 23.45).) Sales $369,600 ROI % Operating assets Operating income Turnover 2.1 Residual income Operating profit margin 14 % Desired rate of return 17 %
a. Compute ROI for Division A.b. Compute residual income for Division B.c. Division A could increase its profit by $40,000 by increasing its investment by $150,000. Computeits total residual income.d. Division A could increase its return on sales by one percentage point, while keeping the same totalsales and investment. Compute its ROI.e. Division B could reduce its investment so that its asset turnover increased by one time, whileholding total sales constant. Compute its ROI.
XYZ Company has two divisions, A and B. Information for each division is as follows A B Net earnings for division P 40,000 P 260,000 Asset base for division P100,000 P1,200,000 Target rate of return 15% 18% Operating Margin (ROS) 10% 20% Weighted average cost of capital 12% 12% What is the return on investment for A? 18% 40% 20% 15%…
a. Compute ROI for Division B.b. Compute residual income for Division A.c. Division B could increase its profit by $80,000 by increasing its investment by $300,000. Computeits total residual income. d. Division A could increase its return on sales by one percentage point, while keeping the same totalsales. Compute its ROI.e. Division A could increase its sales so that its asset turnover increased by one time, while holdingtotal assets constant. Compute its ROI.
Using the following data, estimate the new Return on Investment if there is a 9% decrease in the average operating assets - with the new average operating assets as the base. Sales $2,217,038 Contribution margin Controllable foxxed costs Average operating assets 34% 283,398 $4,189,521 Round to two decimal places. Be sure to enter the answer as a percentage but do not include the % sign.
The following data are available for two divisions of Ryan Enterprises: Alpha Division Beta Division Division operating profit $ 7,360,000 $ 1,240,000 Division investment 32,160,000 3,160,000 The cost of capital for the company is 7 percent. Ignore taxes. Required: a-1. Calculate the ROI for both Alpha and Beta divisions. a-2. If Ryan measures performance using ROI, which division had the better performance? b-1. Calculate the EVA for both Alpha and Beta divisions. (The divisions have no current liabilities.) b-2. If Ryan measures performance using economic value added, which division had the better performance? c. Would your evaluation change if the company’s cost of capital was 10 percent, when evaluated by ROI? when evaluated by EVA?
Contribution Margin Ratio, Variable Cost Ratio, Break-Even Sales Revenue The controller of Ashton Company prepared the following projected income statement: Sales $88,000 Total variable cost 23,760 Contribution margin $64,240 Total fixed cost 43,800 Operating income $20,440 Required: 1. Calculate the contribution margin ratio. Note: Enter as a percent, rounded to the nearest whole number. fill in the blank 1 % 2. Calculate the variable cost ratio. Note: Enter as a percent, rounded to the nearest whole number.fill in the blank 2 % 3. Calculate the break-even sales revenue for Ashton. Note: Round your answer to the nearest dollar. $fill in the blank 3 4. How could Ashton increase projected operating income without increasing the total sales revenue? Decrease the contribution margin ratio
Selected sales and operating data for three divisions of different structural engineering firms are given below: Division C $ 25,450,000 $ 5,090,000 $636,250 12.50% Sales Average operating assets Net operating income Minimum required rate of return Division A $ 12,360,000 $ 3,090,000 $ 494,400 7.00% Required: 1. Compute each division's margin, turnover, and return on investment (ROI). 2. Compute each division's residual income (loss). 3. Assume each division is presented with an investment opportunity yielding a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will accept the opportunity? b. If performance is being measured by residual income, which division or divisions will accept the opportunity? Division B $ 28,360,000 $ 7,090,000 $ 453,760 7.50% Complete this question by entering your answers in the tabs below. Division A Division B Division C Required 1 Required 2 Required 3A Required 3B Assume each division is presented with an…
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Multiproduct breakeven analysis and target profit, taxes Pursuit Company produces two products: Bric and Brac. The following table summarizes the products' details and planned unit sales for the upcoming period: Bric BrAc Sellingpriceperunt...........$S25$30 Variablecostperunit ... $14$17 Planned unit sales volume . . . . . . 800, 000 400,000 Pursuit Company has total fixed costs of $10 million and faces a tax rate of 30%. Required (a)What is Pursuit Company's expected profit at the planned level of sales? (b)Assuming a constant sales mix, what are the unit sales of Bric and Brac required for Pursuit Company to break even? (c) Assuming a constant sales mix, what are the unit sales of Bric and Brac required for Pursuit Company to earn an after-tax income of $910, 000 ?
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Kyle Corporation provides the following information for the Product Division and Service Division for the year. Product Division Service Division 420,000 $ 650,000 195,000 245,000 640,000 610,000 14.0% 14.0% Net sales Operating income Average total assets Target rate of return $ Requirement 1. Calculate the return on investment for each division. (Enter answers as a percent rounded to the nearest hundredth percent, X.XX%) The return on investment for the Product Division is The return on investment for the Service Division is Requirement 2. Which division has the highest ROI? % % Requirement 3. Calculate the residual income for each division. (Round answers to the nearest whole dollar.) The residual income for the Product Division is The residual income for the Service Division is Requirement 4. Which division has the highest residual income?