Baxter Corp. has the following data for its three divisions for the year. Revenues Cost of sales Allocated corporate overhead Other general & administration Return on Investment 12,000,000 38,000,000 X Y Z $ $ $ 28,000,000 18,000,000 720,000 2,280,000 14,000,000 2,100,000 7,695,000 1,585,000 11,000,000 10,000,000 15% 12% 9% Required: a. Compute net 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.

Baxter Corp. has the following data for its three divisions for the year. Revenues Cost of sales Allocated corporate overhead Other general & administration Return on Investment 12,000,000 38,000,000 X Y Z $ $ $ 28,000,000 18,000,000 720,000 2,280,000 14,000,000 2,100,000 7,695,000 1,585,000 11,000,000 10,000,000 15% 12% 9% Required: a. Compute net 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.

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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Service department charges 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: A. Determine the total amount of payroll checks and purchase requisitions processed per year by the company and each division. B. Using the cost driver information in (A), determine the annual amount of payroll and purchasing costs allocated to the Residential, Commercial, and Government Contract divisions from payroll and purchasing services. C. Why does the Residential Division have a larger support department allocation than the other two divisions, even though its sales are lower?
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