Determining Missing Items from Computations Data for the North, South, East and West divisions of Free Bird Company are as follows:   Sales Income from Operations Invested Assets Return on Investment Profit Margin Investment Turnover North   $860,000   (a)   (b)   17.5%   7.0%   (c)   South   (d)   $51,300   (e)   (f)   4.5%   3.8   East   $1,020,000   (g)   $680,000   15.0%   (h)   (i)   West   $1,120,000   $89,600   $560,000   (j)   (k)   (l)   a.  Determine the missing items, identifying each by the letters (a) through (l). If required, round percents and investment turnover to one decimal place.                         a. $   b. $   c.     d. $   e. $   f.   % g. $   h.   % i.     j.   % k.   % l.     b.  Determine the residual income for each division, assuming that the minimum acceptable rate of return established by management is 12%. Division Residual Income North Division $ South Division $ East Division $ West Division $ c.  Which division is the most profitable in terms of (1) return on investment and (2) residual income?   Most Profitable 1.  Return on Investment   2.  Residual Income

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 16E
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Determining Missing Items from Computations

Data for the North, South, East and West divisions of Free Bird Company are as follows:


 

Sales

Income from Operations

Invested Assets
Return on Investment Profit Margin
Investment Turnover
North   $860,000   (a)   (b)   17.5%   7.0%   (c)  
South   (d)   $51,300   (e)   (f)   4.5%   3.8  
East   $1,020,000   (g)   $680,000   15.0%   (h)   (i)  
West   $1,120,000   $89,600   $560,000   (j)   (k)   (l)  

a.  Determine the missing items, identifying each by the letters (a) through (l). If required, round percents and investment turnover to one decimal place.

                       
a. $  
b. $  
c.    
d. $  
e. $  
f.   %
g. $  
h.   %
i.    
j.   %
k.   %
l.    

b.  Determine the residual income for each division, assuming that the minimum acceptable rate of return established by management is 12%.

Division Residual Income
North Division $
South Division $
East Division $
West Division $

c.  Which division is the most profitable in terms of (1) return on investment and (2) residual income?

  Most Profitable
1.  Return on Investment  
2.  Residual Income  
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