You firm has just been hired by Toes in the Water, Inc., a manufacturer of kayaks, to provide consulting services. Toes in the Water operates two divisions: Ocean and Lake. Each divisional vice president is held responsible for both profit andinvested capital. Each division consists of two branches: Sand and Clay. Each branch manager is responsible for generating revenue and controlling costs. The Ocean division's Sand branch has two departments, Zac and Brown. Bothdepartment managers are responsible for controlling costs.You asked a staff member to provide a list of the performance evaulation tools they would suggest using to evaluate the Sand and Clay branches. They provided the following list:budget versus actual report• segmented income statement• return on investmentDo you agree with the staff member's list? Why or why not?A. No. Return on investment should not be used because the branches are considered profit centers.B. Yes. All of the tools listed are valid performance evlaulation tools for the branches.C. No. Residual income should be used in conjunction with return on investment to evaluate the branches.D. No. None of the tools listed consider the company's target rate of return.O E. Yes. The tools listed are comprehensive and consider each branch's revenue, expenses, and assets.

Answered: er, Inc., a manufacturer of kayak…

er, Inc., a manufacturer of kayak ranches: Sand and Clay. Each lling costs. performance evaulation tools t or why not? used because the branches are mance evlaulation tools for the

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 7E: Horton Technology has two divisions, Consumer and Commercial, and two corporate support departments,...

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