Required Information [The following information applies to the questions displayed below.] Bentler Industries provides high-technology navigation and communication equipment for the aerospace and shipbuilding Industries. It is organized into two divisions, Aeronautics and Marine. The division presidents are given wide decision- making authority that covers operations, marketing, and asset acquisition and disposal. Bentler evaluates the division presidents on, among other things, ROI in their respective divisions. ROI is based on after-tax divisional Income and beginning-of-year assets. Divisional Income Includes allocated corporate overhead. For the most recent year (year 3), data from the two divisions shows the following: Allocated corporate overhead ($eee) Cost of sales Other general and administrative costs R&D costs Sales Total assets (January 1, Year 3) The tax rate applied at Bentler is 20 percent. Aeronautics Division $ 15,000 16,100 830 15,000 50,000 30,000 Marine Division $ 9,000 13,600 1,250 2,400 30,000 20,000 tequired: . Compute divisional Income for year 3 for each of the divisions. 1. Evaluate the two divisions based on the Information from the divisional Income computed. 2. In terms of divisional Income, which division performed better? 1. Compute ROI for year 3 for each of the divisions. 2. Which division performed better? 1. Compute residual income for year 3 for each of the divisions. Bentler uses a cost of capital of 12 percent. 2. Which division performed better?
Required Information [The following information applies to the questions displayed below.] Bentler Industries provides high-technology navigation and communication equipment for the aerospace and shipbuilding Industries. It is organized into two divisions, Aeronautics and Marine. The division presidents are given wide decision- making authority that covers operations, marketing, and asset acquisition and disposal. Bentler evaluates the division presidents on, among other things, ROI in their respective divisions. ROI is based on after-tax divisional Income and beginning-of-year assets. Divisional Income Includes allocated corporate overhead. For the most recent year (year 3), data from the two divisions shows the following: Allocated corporate overhead ($eee) Cost of sales Other general and administrative costs R&D costs Sales Total assets (January 1, Year 3) The tax rate applied at Bentler is 20 percent. Aeronautics Division $ 15,000 16,100 830 15,000 50,000 30,000 Marine Division $ 9,000 13,600 1,250 2,400 30,000 20,000 tequired: . Compute divisional Income for year 3 for each of the divisions. 1. Evaluate the two divisions based on the Information from the divisional Income computed. 2. In terms of divisional Income, which division performed better? 1. Compute ROI for year 3 for each of the divisions. 2. Which division performed better? 1. Compute residual income for year 3 for each of the divisions. Bentler uses a cost of capital of 12 percent. 2. Which division performed better?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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![Required Information
[The following information applies to the questions displayed below.]
Bentler Industries provides high-technology navigation and communication equipment for the aerospace and shipbuilding
Industries. It is organized into two divisions, Aeronautics and Marine. The division presidents are given wide decision-
making authority that covers operations, marketing, and asset acquisition and disposal. Bentler evaluates the division
presidents on, among other things, ROI in their respective divisions. ROI is based on after-tax divisional income and
beginning-of-year assets. Divisional Income includes allocated corporate overhead.
For the most recent year (year 3), data from the two divisions shows the following:
corporate overhead ($000)
Alloca
Cost of sales
Other general and administrative costs
R&D costs
Sales
Total assets (January 1, Year 3)
The tax rate applied at Bentler is 20 percent.
Aeronautics
Division
$ 15,000
16,100
830
15,000
50,000
30,000
Marine
Division
$ 9,000
13,600
1,250
2,400
30,000
20,000
Required:
a. Compute divisional Income for year 3 for each of the divisions.
b1. Evaluate the two divisions based on the Information from the divisional Income computed.
b2. In terms of divisional Income, which division performed better?
c1. Compute ROI for year 3 for each of the divisions.
c2. Which division performed better?
d1. Compute residual income for year 3 for each of the divisions. Bentler uses a cost of capital of 12 percent.
d2. Which division performed better?](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F1a4eeb32-1652-4622-80f9-de25f0a55277%2F717e75a3-2633-4e3d-bb73-6f420b98a1b9%2Fbn7osqq_processed.png&w=3840&q=75)
Transcribed Image Text:Required Information
[The following information applies to the questions displayed below.]
Bentler Industries provides high-technology navigation and communication equipment for the aerospace and shipbuilding
Industries. It is organized into two divisions, Aeronautics and Marine. The division presidents are given wide decision-
making authority that covers operations, marketing, and asset acquisition and disposal. Bentler evaluates the division
presidents on, among other things, ROI in their respective divisions. ROI is based on after-tax divisional income and
beginning-of-year assets. Divisional Income includes allocated corporate overhead.
For the most recent year (year 3), data from the two divisions shows the following:
corporate overhead ($000)
Alloca
Cost of sales
Other general and administrative costs
R&D costs
Sales
Total assets (January 1, Year 3)
The tax rate applied at Bentler is 20 percent.
Aeronautics
Division
$ 15,000
16,100
830
15,000
50,000
30,000
Marine
Division
$ 9,000
13,600
1,250
2,400
30,000
20,000
Required:
a. Compute divisional Income for year 3 for each of the divisions.
b1. Evaluate the two divisions based on the Information from the divisional Income computed.
b2. In terms of divisional Income, which division performed better?
c1. Compute ROI for year 3 for each of the divisions.
c2. Which division performed better?
d1. Compute residual income for year 3 for each of the divisions. Bentler uses a cost of capital of 12 percent.
d2. Which division performed better?
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