The following data are available for Segment X of XYZ Company: Net income of the segment $50,000 Contribution to indirect expenses 40,000 Controllable income by manager 48,000 Assets directly used by the manager 360,000 Assets under the control of the segment manager 240,000 Determine the return on investment for evaluating 1. the income performance of the manager of Segment X and 2. the rate of income contribution of the segment.

The following data are available for Segment X of XYZ Company: Net income of the segment $50,000 Contribution to indirect expenses 40,000 Controllable income by manager 48,000 Assets directly used by the manager 360,000 Assets under the control of the segment manager 240,000 Determine the return on investment for evaluating 1. the income performance of the manager of Segment X and 2. the rate of income contribution of the segment.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Subject - account Please help me. Thankyou.
Assume a company with two divisions (A and B) prepared the following segmented income statement: A B Traceable fixed expenses Sales Variable expenses Contribution margin Segment margin Common fixed expenses Net operating income The dollar sales required for the company to break even is closest to: $ 300,000 $ 209,500 Total $ 509,500 120,000 180,000 140,000 260,000 69,500 249,500 100,000 80,000 180,000 $ 80,000 $ (10,500) 69,500 48,000 $ 21,500
3. If management desires a minimum acceptable return on investment of 10%, determine the residual income for each division.
For its three investment centers, Ayayai Company accumulates the following data: Sales Controllable margin Average operating assets $2,480,000 1,736,000 6,200,000 The return on investment 11 $4,960,000 2.480,000 9,920.000 Compute the return on investment (ROI) for each center. 25 % 111 $4,960,000 4,464,000 12.400.000 11 21.43 m 24 96
The following data are available for two divisions of Ryan Enterprises: Alpha Division Beta Division Division operating profit $ 7,360,000 $ 1,240,000 Division investment 32,160,000 3,160,000 The cost of capital for the company is 7 percent. Ignore taxes. Required: a-1. Calculate the ROI for both Alpha and Beta divisions. a-2. If Ryan measures performance using ROI, which division had the better performance? b-1. Calculate the EVA for both Alpha and Beta divisions. (The divisions have no current liabilities.) b-2. If Ryan measures performance using economic value added, which division had the better performance? c. Would your evaluation change if the company’s cost of capital was 10 percent, when evaluated by ROI? when evaluated by EVA?
The operating income and the amount of invested assets in each division of Conley Industries are as follows: Operating income Invested Assets Retail Division $103,400 $470,000 Commercial Division 105,000 420,000 Internet Division 130,000 500,000 Assume that management has established a 10% minimum acceptable return for invested assets. a. Determine the residual income for each division. Retail Division Commercial Division Internet Division Operating income $103,400 $105,000 $130,000 Minimum acceptable operating income as a percent of invested assets Residual income $ $ $ b. Which division has the most residual income?
Assume a company with two divisions (A and B) prepared the following segmented income statement: A B Total Sales $ 300,000 $ 200,000 $ 500,000 Variable expenses 120,000 140,000 260,000 Contribution margin 180,000 60,000 240,000 Traceable fixed expenses 100,000 80,000 180,000 Segment margin $ 80,000 $ (20,000) 60,000 Common fixed expenses 50,000 Net operating income $ 10,000 The dollar sales required for the company to break even is closest to:
A company's division has sales of $2,610,000, income of $991,800, and average assets of $1,800,000. Compute the division's profit margin, return on investment, and investment turnover. Compute the Division's Profit Margin. Numerator: Denominator: Profit Margin Profit margin Compute the Division's Return on investment. Numerator: Denominator: Return on investment Return on investment Compute the Division's Investment Turnover. Numerator: Denominator: Investment Turnover %3D Investment turnover
Presented below is information related to the Southern Division of Lumber, Inc. Contribution margin$1,235,600Controllable margin$931,270Average operating assets$4,049,000Minimum rate of return16% Compute the Southern Division’s return on investment and residual income. Return on investment%Residual income$
(J) Selected sales and operating data for three divisions of different structural engineering firms are given as follows: Division ADivision BDivision CSales$ 12,120,000$ 28,120,000$ 20,120,000Average operating assets$ 3,030,000$ 7,030,000$ 5,030,000Net operating income$ 496,920$ 449,920$ 503,000Minimum required rate of return7.00%7.50%10.00%Required: 1. Compute the margin, turnover, and return on investment (ROI) for each division. 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 8% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity