Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, revenues and costs are as follows: Casino Hotel $34, 000, 000 17, 000, 000 $27,000, 000 14,000, 000 Revenues Costs The casino and the hotel have a joint marketing arrangement by which the hotel gives coupons redeemable at casino slot machines and the casino gives discount coupons good for stays at the hotel. The value of the coupons for the slot machines redeemed during the past year totaled $6,000,000. The discount coupons redeemed at the hotel totaled $1,000,000. As of the end of the year, all coupons for the current year expired. Required: What are the operating profits for each division considering the effects of the costs arising from the joint marketing agreement? (Enter your answers In thousands.)

Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, revenues and costs are as follows: Casino Hotel $34, 000, 000 17, 000, 000 $27,000, 000 14,000, 000 Revenues Costs The casino and the hotel have a joint marketing arrangement by which the hotel gives coupons redeemable at casino slot machines and the casino gives discount coupons good for stays at the hotel. The value of the coupons for the slot machines redeemed during the past year totaled $6,000,000. The discount coupons redeemed at the hotel totaled $1,000,000. As of the end of the year, all coupons for the current year expired. Required: What are the operating profits for each division considering the effects of the costs arising from the joint marketing agreement? (Enter your answers In thousands.)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, revenues and costs are as follows: Casino Hotel Revenues $ 32,000,000 $ 22,000,000 Costs 18,000,000 16,000,000 The casino and the hotel have a joint marketing arrangement by which the hotel gives coupons redeemable at casino slot machines and the casino gives discount coupons good for stays at the hotel. The value of the coupons for the slot machines redeemed during the past year totaled $4,800,000. The discount coupons redeemed at the hotel totaled $2,000,000. As of the end of the year, all coupons for the current year expired. Required: What are the operating profits for each division considering the effects of the costs arising from the joint marketing agreement? (Enter your answers in thousands.)
Three major transportation segments and a major company within each segment are as follows: Segment Company Railroads Company R, Inc. (CORI) Motor carriers Company M, Inc. (COMI) Transportation Arrangement Company T, Inc. (COTI) Company R Company M Company T Sales $5,070,961 $3,748,940 $3,487,549 Average long-term operating assets 1,370,530 720,950 591,110 a. Determine the asset turnover for all three companies. Round to one decimal place. Company R fill in the blank 1 Company M fill in the blank 2 Company T fill in the blank 3 Do not give solution in image
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The following partial financial information (in thousands of dollars) is available for Thole, Incorporated: Corporate overhead costs at Thole are allocated to divisions based on relative sales. Required: a. Complete the income statements for both divisions and the corporation as a whole. Note: Enter your answers in thousands. Enter all values as positive value. Round your answers to 1 decimal place. Sales Cost of sales Gross margin Selling, General and Administrative Allocated corporate costs Operating income Tax expense (@20%) After-tax income Gross margin percentage Operating margin Profit margin Pacific 20.0 (Thousands of Dollars) Southern 40.00 % 20.00 % 16.00 % 50.00 % 36.00 % 28.80 % $ Total 100.0 984.0 48.00 % 32.80 % 26.24 %
A recent accounting graduate from Divine Word University evaluated the operating performance of Boswell Company's four divisions. The following presentation was made to Boswell's Board of Directors. During the presentation, the accountant made the recommendation to eliminate the Southern Division stating that total net income would increase by P40,000. (See analysis below.) Other Three Divisions Southern Division Total Sales P2,000,000 P480,000 P2,480,000 Cost of Goods Sold 950,000 400,000 1,350,000 Gross Profit…
Buckley Company operates three segments. Income statements for the segments imply that profitability could be improved if Segment A were eliminated. BUCKLEY COMPANY Income Statements for Year 2 Segment A B C Sales $ 330,000 $ 480,000 $ 500,000 Cost of goods sold (242,000 ) (184,000 ) (190,000 ) Sales commissions (30,000 ) (44,000 ) (44,000 ) Contribution margin 58,000 252,000 266,000 General fixed operating expenses (allocation of president’s salary) (92,000 ) (92,000 ) (92,000 ) Advertising expense (specific to individual divisions) (6,000 ) (20,000 ) 0 Net income (loss) $ (40,000 ) $ 140,000 $ 174,000 Required Prepare a schedule of relevant sales and costs for Segment A. Prepare comparative income statements for the company as a whole under two alternatives: (1) the retention of Segment A and (2) the elimination of Segment A. Options for required A table are: Advertising…
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Yozamba Technology has two divisions, Consumer and Commercial, and two corporate service departments, Tech Support and Purchasing. The corporate expenses for the year ended December 31, 20Y7, are as follows: Tech Support Department $800,100 Purchasing Department 258,000 Other corporate administrative expenses 455,000 Total corporate expense $1,513,100 The other corporate administrative expenses include officers’ salaries and other expenses required by the corporation. The Tech Support Department charges the divisions for services rendered, based on the number of computers in the department, and the Purchasing Department charges divisions for services, based on the number of purchase orders for each department. The usage of service by the two divisions is as follows: Tech Support Purchasing Consumer Division 390 computers 6,000 purchase orders Commercial Division 240 11,200 Total 630 computers 17,200 purchase orders The service department charges of the…
Chigua Company has seven operating segments, but only four (One, Two, Three, and Four) are of significant size to warrant separate disclosure. As a whole, the segments generated revenues of $1,017,000 ($784,000+ $233,000) from sales to outside customers. In addition, the segments had $307,000 in intersegment sales ($254,000+ $53,000). Outside Sales 201,000 161,000 151,000 Intersegment Sales $ 111,000 71,000 41,000 31,000 Accounts One $ 271,000 Two Three Four Totals $ 784,000 $ 254,000 Five Six $ 101,000 Seven Totals $ 233,000 $ 21,000 11,000 21,000 $ 53,000 Which of the following statements is true? 81,000 51,000 Multiple Choice A sufficient number of segments is being reported because those segments have $784,000 in outside sales of a total of $1,017,000 for the company as a whole. A sufficient number of segments is being reported because those segments have $1,038,000 in total sales of a total of $1,324,000 for the company as a whole. Not enough segments are being reported because…
SS Ltd is a listed company that operates three divisions, all focused on single activities as shown in the table below. SS Ltd identified a surrogate listed company for each of its divisions in order to calculate cut-off rates for new investments. Division Proxy Beta Assets employed ($m) A 0.7 3 B 1.1 8 C 0.8 4 Total 15 The company has T-bill investments, valued at $3 million, earning 2 percent. The stock market returns averaged 12 percent per year for the last ten years. Required: Calculate the required return for each division. Assume conditions of the CAPM are met. Calculate SS Ltd’s overall rate of return. Assume SS Ltd sold its T-bills and re-invested the entire sum in a new (fourth) division with a beta value of 0.78. Comment if the overall risk of SS Ltd will decrease, increase or remain more or less the…
Three major transportation segments and a major company within each segment are as follows: Segment Company Motor carriers YRC Worldwide Inc. (YRCW) Railroads Union Pacific Corporation (UNP) Transportation Arrangement C.H. Robinson Worldwide Inc. (CHRW) YRC Worldwide Union Pacific C.H. RobinsonWorldwide Sales $3,460,810 $6,255,356 $3,816,960 Average long-term operating assets 844,100 1,359,860 636,160 a. Determine the asset turnover for all three companies. Round to one decimal place. YRC Worldwide fill in the blank 1 Union Pacific fill in the blank 2 C.H. Robinson Worldwide fill in the blank 3