The three divisions of Yummy Foods are Snack Goods, Cereal, and Frozen Foods. The divisions are structured as investment centers. The following responsibility reports were prepared for the three divisions for the prior year: Snack Goods Cereal Frozen Foods $ 2,520,000 (1,122,000) $ 2,200,000 $2,100,000 (976,800) Revenues Operating expenses Operating income before support department allocations Support department allocations: (1,366,600) $ 833,400 $ 1,398,000 $1,123,200 Promotion $ (300,000) $ (600,000) $ (468,000) Legal Total service department charges Operating income (137,400) $ (437,400) $ 396,000 $ 2,000,000 (243,600) $ (843,600) $ 554,400 $ 1,680,000 (235,200) $ (703,200) $ 420,000 Invested assets $1,750,000 a. Which division is making the best use of invested assets and should be given priority for future capital investments?
The three divisions of Yummy Foods are Snack Goods, Cereal, and Frozen Foods. The divisions are structured as investment centers. The following responsibility reports were prepared for the three divisions for the prior year: Snack Goods Cereal Frozen Foods $ 2,520,000 (1,122,000) $ 2,200,000 $2,100,000 (976,800) Revenues Operating expenses Operating income before support department allocations Support department allocations: (1,366,600) $ 833,400 $ 1,398,000 $1,123,200 Promotion $ (300,000) $ (600,000) $ (468,000) Legal Total service department charges Operating income (137,400) $ (437,400) $ 396,000 $ 2,000,000 (243,600) $ (843,600) $ 554,400 $ 1,680,000 (235,200) $ (703,200) $ 420,000 Invested assets $1,750,000 a. Which division is making the best use of invested assets and should be given priority for future capital investments?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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THE FIRST PICTURE IS TO Create an View Point for this study analysis. The second picture is the problem/ basis.
Transcribed Image Text:III - VIEW POINT
(Consider always the point of view by the concerned
officer/s based on the course being undertaken example:
Marketing Director if the subject is marketing management,
CEO if business Policy/ management.)
Transcribed Image Text:TIF 10-4
Evaluating Divisional Performance
The three divisions of Yummy Foods are Snack Goods, Cereal, and Frozen Foods. The divisions are
structured as investment centers. The following responsibility reports were prepared for the three
divisions for the prior year:
Snack Goods
Cereal
Frozen Foods
$ 2,200,000
(1,366,600)
$ 2,520,000
(1,122,000)
Revenues
$2,100,000
Operating expenses
Operating income before
support department allocations
Support department allocations:
(976,800)
$833,400
$ 1,398,000
$1,123,200
Promotion
$ (300,000)
$ (600,000)
$ (468,000)
Legal
Total service department charges
Operating income
(137,400)
$ (437,400)
(243,600)
$ (843,600)
$ 554,400
$ 1,680,000
(235,200)
$ (703,200)
$ 420,000
$396,000
Invested assets
$ 2,000,000
$1,750,000
a. Which division is making the best use of invested assets and should be given priority for
future capital investments?
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