Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Training Services $530,000 $780,000 Athletic Wear $600,000 $106,000 $120,000 $ 21, 200 $156,000 $ 31,200 15% $ 30,000 13% Sales Average operating assets Operating income Minimum required rate of return Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. Fitness training Spa services Athletic wear ROI Residual income % % % 2. Compute the residual income for each division. 13% Fitness Training Spa Services Athletic Wear 3. Assume that each division is presented with an investment opportunit

Three divisions of Jameson Co. report the following sales and operating data: Fitness Spa Training Services $530,000 $780,000 Athletic Wear $600,000 $106,000 $120,000 $ 21, 200 $156,000 $ 31,200 15% $ 30,000 13% Sales Average operating assets Operating income Minimum required rate of return Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. Fitness training Spa services Athletic wear ROI Residual income % % % 2. Compute the residual income for each division. 13% Fitness Training Spa Services Athletic Wear 3. Assume that each division is presented with an investment opportunit

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 1CE: Forchen, Inc., provided the following information for two of its divisions for last year: Required:...

See similar textbooks

Related questions

Q: Provide the missing data in the following table for a distributor of martial arts products: (Round…

A: Asset Turnover Ratio represent the efficiency of the Business Entity in utilizing its Assets for…

Q: Cabell Products is a division of a major corporation. Last year the division had total sales of…

A: The division's return on investment is calculated by dividing the net operating income by average…

Q: Ceder Products is a division of a major corporation. Last year the division had total sales of…

A: Margin = Net operating income / Total sales

Q: Assume a company with two divisions (A and B) prepared the following segmented income statement:…

A: Segment margin of A can be calculated by deducting segment margin of B from total margin.

Q: Provide the missing data in the following table for a distributor of martial arts products: (Round…

A: ROI means return on investment. It is the percentage return earned by the entity on the operating…

Q: Provide the missing data in the following table for a distributor of martial arts products: (Round…

A: The return on investment is a measure of profitability, It is the ratio used by investors to…

Q: Fashion Forward, Inc. is decentralized into two divisions which are investment centers: Men’s Wear…

A: Return on Investment or ROI is the accounting ratio which measures the efficiency or the return one…

Q: Consider the following data for three divisions of a company, X, Y, and Z: Divisional: X Y Z…

A: Operating income for division Y (O) = $108200 Investment for division Y (I) = $764100

Q: Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama.…

A: Return on investment is a measure to find out profit or loss on the investment. It measure the…

Q: Sunland Decor sells home decor items through three distribution channels-retail stores, the…

A: Net operating income :— It is the difference between sales revenue and operating expenses. Margin…

Q: Selected sales and operating data for three divisions of different structural engineering firms are…

A: Margin :— It is the ratio of net operating income and sales. Turnover :— It is the ratio of sales…

Q: A retailer reports the following for its geographic divisions for the year. 1. Compute profit…

A: The objective of the question is to calculate the profit margin for each geographic division of the…

Q: Fashion Forward, Inc. is decentralized into two divisions which are investment centers: Men’s Wear…

A: Preparation of divisional income statement for the Men’s Wear: Fashion Forward Inc.…

Q: Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama.…

A: Return on investment- is measurement of performance evaluation on investments made where's residual…

Q: Adams Cough Drops operates two divisions. The following information pertains to each division for…

A: Residual income is the remaining income after distributing the profits to the shareholders. The…

Q: Revenues Transactions (seee) $ 74,100 39,900 (000) 1,066.5 283.5 cost allocation if $3.8 million of…

A: Variable costs are costs that varies with the change in the level of output whereas fixed costs are…

Q: Profit Margin, Investment Turnover, and return on investment The condensed income statement for the…

A: Return on Investment is a ratio which is used by companies to measure financial performance. In…

Q: Augustus Electrical Company has 2 divisions, one in Georgetown and one in Berbice Guyana and…

A: Return on investment (ROI) is a relative measure to measure a divisional performance in the…

Q: Dacker Products is a division of a major corporation. The following data are for the most recent…

A: Return on Investment is used to evaluate the profitability of an asset or an investment and the…

Q: Arlington Clothing, Inc., shows the following information for its two divisions for year 1.…

A: Ratio analysis is a method of measuring the financial position of the organization with different…

Q: Long Beach Pharmaceutical Company has two divisions, which reported the following results for the…

A: Financial Ratio Analysis is a step ahead of the accounting process after the preparation of the…

Q: want correct answer for this question

A: Asset turnover:The asset turnover is a financial ratio that measures how well the company's assets…

Q: Profit Margin, Investment Turnover, and return on investment The condensed income statement for the…

A: Hi there, thanks for posting the questions. As per our Q&A honour code, we must answer the first…

Question

3. Assume that each division is presented with an investment opportunity that would yield a rate of return of 21%.
a. If performance is being measured by ROI, which division or divisions will probably accept the opportunity?
Fitness Training
Spa Services
Athletic Wear
b. If performance is being measured by residual income, which division or divisions will probably accept the opportunity?
Fitness Training
Spa Services
Athletic Wear

Three divisions of Jameson Co. report the following sales and operating data:
Fitness
Spa
Training Services
$530,000 $780,000
Athletic
Wear
$600,000
$106,000
$ 21, 200
$156,000
$ 31,200
15%
$120,000
$ 30,000
13%
Sales
Average operating assets
Operating income
Minimum required rate of return
Required:
1. Compute the ROI for each division, using the formula stated in terms of margin and turnover.
Fitness training
Spa services
Athletic wear
ROI
Residual income
%
%
%
2. Compute the residual income for each division.
13%
Fitness Training Spa Services Athletic Wear
3. Assume that each division is presented with an investment opportunit

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1 Introduction

Step 2 Working Note

Step 3 Working Note

Step 4 Working Note

Step 5 Working Note

Step 6 Final Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 6 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

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.

Similar questions

hree divisions of Jameson Co. report the following sales and operating data: Fitness Training Spa Services Athletic Wear Sales $ 640,000 $ 840,000 $ 700,000 Average operating assets $ 160,000 $ 210,000 $ 140,000 Operating income $ 25,600 $ 33,600 $ 35,000 Minimum required rate of return 13 % 15 % 13 % Required: 1. Compute the ROI for each division, using the formula stated in terms of margin and turnover. 2. Compute the residual income for each division. 3. Assume that each division is presented with an investment opportunity that would yield a rate of return of 20%. 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?
Please Give me Answerv
Provide answer with this q
For its three investment centers, Indigo Company accumulates the following data: Sales Controllable margin Average operating assets 1 $2,400,000 $4,800,000 $4,800,000 1,560,000 2.208,000 6,000,000 9,600,000 The return on investment i 11 Compute the return on investment (ROI) for each center. % 111 4,080,000 12,000,000 HE %
want correct answer for this question
Dacker Products is a division of a major corporation. The following data are for the most recent year of operations: Sales Net operating income Average operating assets $ 36,680,000 $ 2,908,960 $ 8,200,000 The company's minimum required rate of return The division's margin used to compute ROI is closest to: Multiple Choice о 30.3% 35.5% 22.4% о 7.9% 14%
Terra Company has two divisions, the Retail Division and the Wholesale Division. The following information was gathered for the two divisions for the current year: Retail Division Wholesale Division Operating income $ 7,500,000 $ 4,000,000 Operating assets $ 37,500,000 $ 17,500,000 Assuming that these are the only divisions of Terra Company, what is the ROI for the company as a whole? Multiple Choice 20.00% 20.91% 22.86% 42.86%
Arlington Clothing, Inc., shows the following information for its two divisions for year 1. Sales revenue Cost of sales Allocated corporate overhead Other general and administration Required: a. Compute divisional operating income for the two divisions. Ignore taxes. b-1. What are the gross margin and operating margin percentages for both divisions? b-2. How well have these divisions performed? Req A Complete this question by entering your answers in the tabs below. Operating income Lake Region $4,040,000 2,631,300 242,400 541,900 Req B1 stion 10- Hom... Req B2 Compute divisional operating income for the two divisions. Ignore taxes. (Enter your answers in thousa to 1 decimal place.) Coastal Region $12,950,000 6,475,000 777,000 3,743,000 Lake Region Coastal Region Reg A Req B1 > < Prev
Company BCD has two departments where Net Income, Assets and Return on Investment (ROI) is tracked. Compute ROI. Net Income Average Assets ROI Dept A $350,000 $900,000 ____________ Dept B $100,000 $550,000 ____________ The company is implementing a target income of 10% of average assets. Compute the target income and residual income (loss) for each department. Net Income Average Assets Target Income Residual Income (Loss) Dept A $350,000 $900,000 ____________ ____________ Dept B $100,000 $550,000 ____________ ____________ please dont provide answer in an image format thank you
The following revenue data were taken from the December 31, 2017, General Electric annual report (10-K): For each segment and each year, calculate intersegment sales (another name for transfer sales) as a percentage of total sales. Using Microsoft Excel or another spreadsheet application, create a clustered column graph to show the 2016 and 2017 percentages for each division. Comment on your observations of this data. How might a division sales manager use this data?
Profit margin, investment turnover, and ROI Briggs Company has operating income of 36,000, invested assets of 180,000, and sales of 720,000. Use the DuPont formula to compute the return on investment and show (A) the profit margin, (B) the investment turnover, and (C) the return on investment.
The following revenue data were taken from the December 31, 2017, Coca-Cola annual report (10-K): For each segment and each year, calculate intersegment sales (another name for transfer sales) as a percentage of total sales, Using Microsoft Excel or another spreadsheet application, create a clustered column graph to show the 2016 and 2017 percentages for each division. Comment on your observations of this data. How might a division sales manager use this data?