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?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

dont uplode images in answer

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?
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?
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 3 steps

Blurred answer
Knowledge Booster
Strategic business units
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education