a. What are the budgeted operating profits in each division for year 1 after the corporate costs are allocated?b. At the end of year 1, actual corporate costs incurred were $3.7 million. Of the $3.7 million, $1.44 million was fixed, $1.3 million wasvariable with respect to revenues, and $0.96 million was variable with respect to FTEs. Actual division results in year 1, prior to anyallocation, are as follows:Employees (FTE)Revenues ($000)Direct costs ($000)AgricultureMining2555$ 10,4007,400$ 3,000$ 15,60013,600$ 2,000Operating profit before allocation ($000)What are the actual (reported) operating profits in each division for year 1 after the corporate costs are allocated?Complete this question by entering your answers in the tabs below.Required A Required BWhat are the budgeted operating profits in each division for year 1 after the corporate costs are allocated?Note: Do not round intermediate calculations. Enter your answers in thousands of dollars.RevenuesDirect costsOperating profit before allocationsSA$Corporate costsOperating profitAgricultureMiningSA0$0$SATotal0000$0$0 $0

Step 1: Step 2: Step 3: Step 4:

Answered: a. What are the budgeted operating…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 5E: Service department charges In divisional income statements prepared for Demopolis Company, the...

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(17) Assume that divisional income from operations amounts to $220,000, and top management has established 13% as the minimum acceptable return on divisional assets totaling $1,077,000. The residual income for the division is?
A portion of the divisional income statement for the year just ended is presented below in a condensed form. Department F Net sales $93,800 Cost of goods sold 72,400 Gross profit $21,400 Operating expenses 28,900 Loss from operations $(7,500) The operating expenses of Department F include $16,000 for direct expenses. It is estimated that the discontinuance of Department F would not have affected the sales of the other departments nor have reduced the indirect expenses of the business. Assuming the accuracy of these estimates, determine the effect (increase or decrease and the amount) on the operating income of the business if Department F had been discontinued. X Decrease
3. In divisional income statements prepared for Demopolis Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll distributions, and the Purchasing Department costs are charged back on the basis of the number of purchase requisitions. The Payroll Department had expenses of $64,560, and the Purchasing Department had expenses of $40,000 for the year. The following annual data for Residential, Commercial, and Government Contract divisions were obtained from corporate records: Residential Commercial Government Contract Sales $2,000,000 $3,250,000 $2,900,000 Number of employees: Weekly payroll (52 weeks a year) Monthly Payroll Number of purchase requisitions per year 410 210 160 75 35 15 7,400 3,000 2,000 a. Determine the total dollar amount of payroll checks and purchase requisitions processed per year by the company and each division. ing the activity base information in (a), determine the annual dollar amount of payroll and…
Burwell Manufacturing is organized into two divisions (Agriculture and Mining) and a corporate headquarters. The financial group of the corporate staff prepared financial operating plans (budgets) for the two divisions for the upcoming year (year 1). Selected information from the plans is as follows: Employees (full-time equivalent, or FTE) Revenues ($000) Direct division costs ($000) Operating profit before allocation ($000) Agriculture 23 $ 8,000 5,200 $ 2,800 Mining 52 $ 17,000 13,300 $ 3,700 Corporate overhead costs are expected to be $3.5 million in year 1. Of the $3.5 million, $1.25 million is fixed and the remainder is variable. Two-thirds of the variable cost is variable with respect to revenue. The other third is variable with respect to the number of full-time equivalent (FTE) employees. Division managers are evaluated and compensated in part on division operating profit (including any allocated corporate costs) relative to the budget. Corporate overhead at Burwell is…
The operating income and the amount of invested assets in each division of Conley Industries are as follows: a. Compute the return on investment for each division. b. Which division is the most profitable per dollar invested? Based on the data in Exercise 10 assume that management has established a 15% minimum acceptable return for invested assets. a. Determine the residual income for each division. b. Which division has the most residual income?
Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions: the Adams Division and the Jefferson Division. The following information pertains to last years results: Washingtons actual cost of capital was 12%. Exercise 11-32 Residual Income Refer to the information for Washington Company above. In addition, Washington Companys top management has set a minimum acceptable rate of return equal to 8%. Required: 1. Calculate the residual income for the Adams Division. 2. Calculate the residual income for the Jefferson Division.
Divisional performance analysis and evaluation The vice president of operations of Recycling Industries is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Instructions 1. Prepare condensed divisional income statements for the year ended December 31, 20Y8, assuming that there were no support department allocations. 2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. (Round percentages to one decimal place and the investment turnover to two decimal places.) 3. If management desires a minimum acceptable return on investment of 10%, 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).
The following selected data pertain to the Argent Division for last year: Required: 1. How much is the residual income? 2. How much is the return on investment? (Rounded to four significant digits.)
A. Compute the divisional ROI for the Campus Division. B. Compute the divisional RI for the Campus Division.
A. Compute the divisional ROI for the Campus Division. B. Compute the divisional RI for the Campus Division.
Carter Company reported the following financial numbers for one of its divisions for the year; average total assets of $4,200,000; sales of $4,625,000; cost of goods sold of $2,650,000; and operating expenses of $1,472,000. Assume a target income of 10% of average invested assets. Compute residual income for the division: Multiple Choice $197,500. $50,300. () $83,000. $40,500. $93,000.

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