Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income. Average invested assets The company's hurdle rate is 6.01 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: Complete this question by entering your answers in the tabs below. River Division $ 1,209,000 898,000 $ 311,000 $ 1,150,000 a. Operating income increases by 9 percent. b. Operating income decreases by 10 percent. c. The company invests $250,000 in each division, an amount that generates $114,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.01 percent. 70 Stream Division $ 1,811,000 1,294,000 $ 517,000 $ 1,560,000 7
Coolbrook Company has the following information available for the past year: Sales revenue Cost of goods sold and operating expenses Net operating income. Average invested assets The company's hurdle rate is 6.01 percent. Required: 1. Calculate return on investment (ROI) and residual income for each division for last year. 2. Recalculate ROI and residual income for each division for each independent situation that follows: Complete this question by entering your answers in the tabs below. River Division $ 1,209,000 898,000 $ 311,000 $ 1,150,000 a. Operating income increases by 9 percent. b. Operating income decreases by 10 percent. c. The company invests $250,000 in each division, an amount that generates $114,000 additional income per division. d. Coolbrook changes its hurdle rate to 4.01 percent. 70 Stream Division $ 1,811,000 1,294,000 $ 517,000 $ 1,560,000 7
Cornerstones of Cost Management (Cornerstones Series)
4th Edition
ISBN:9781305970663
Author:Don R. Hansen, Maryanne M. Mowen
Publisher:Don R. Hansen, Maryanne M. Mowen
Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing
Section: Chapter Questions
Problem 1CE: Forchen, Inc., provided the following information for two of its divisions for last year: Required:...
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