Back Mountain Industries (BMI) has two divisions: East and West BMI has a cost of capital of 10 percent. Selected financial Information (In thousands of dollars) for the first year of business follows: East $1, 500 West Sales revenue Income Investnent (beginning of year) Current liabilities (beginning of year) R&D expenditures $6,e00 690 3, 580 250 45e 2,5ee 250 750 650 *R&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 BMI uses return on investment (ROI). (Round your final answers to nearest whole percentage value.) Divisions ROI East West a-2 Which division had the better performance? O East O West
Back Mountain Industries (BMI) has two divisions: East and West BMI has a cost of capital of 10 percent. Selected financial Information (In thousands of dollars) for the first year of business follows: East $1, 500 West Sales revenue Income Investnent (beginning of year) Current liabilities (beginning of year) R&D expenditures $6,e00 690 3, 580 250 45e 2,5ee 250 750 650 *R&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 BMI uses return on investment (ROI). (Round your final answers to nearest whole percentage value.) Divisions ROI East West a-2 Which division had the better performance? O East O West
Chapter12: Balanced Scorecard And Other Performance Measures
Section: Chapter Questions
Problem 3PA: Macon Mills is a division of Bolin Products. Inc. During the most recent year, Macon had a net...
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a-1. Evaluate the performance of the two divisions assuming BMI uses
Transcribed Image Text:Back Mountaln Industries (BMI) has two divisions: East and West. BMI has a cost of capital of 10 percent. Selected financlal information
(In thousands of dollars) for the first year of business follows:
East
West
$6,800
Sales revenue
$1,500
Income
450
690
Investnent (beginning of year)
Current liabilities (beginning of year)
2,500
3, 500
250
250
R&D expenditures
750
650
*R&D is assumed to benefit two perlods. All R&D is spent at the beginning of the year.
Required:
a-1. Evaluate the performance of the two divisions assuming BMI uses retum on investment (ROI). (Round your final answers to
nearest whole percentage value.)
Divisions
ROI
East
West
a-2 Which division had the better performance?
O East
OWest
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