The following data relate to the Motor Division of Young Company: Sales P10,000,000 Variable costs 3,000,000 Direct fixed costs 5,000,000 Invested capital 8,000,000 Allocated actual interest costs 800,000 Capital charge 12% Question: What is the divisional return on investment?

The following data relate to the Motor Division of Young Company: Sales P10,000,000 Variable costs 3,000,000 Direct fixed costs 5,000,000 Invested capital 8,000,000 Allocated actual interest costs 800,000 Capital charge 12% Question: What is the divisional return on investment?

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 4BE: Profit margin, investment turnover, and ROI Briggs Company has operating income of 36,000, invested...

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Question

The following data relate to the Motor Division of Young Company:
Sales P10,000,000
Variable costs 3,000,000
Direct fixed costs 5,000,000
Invested capital 8,000,000
Allocated actual interest costs 800,000
Capital charge 12%

Question: What is the divisional return on investment?

Formula Formula ROI (%) = Net Income Principal Amount × 100

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