X Solutions , a division of XYZ Corporation buys and installs aluminum windows. For the most recent year, the division had the following performance targets: Asset turnover 2.5 Profit margin 6% Target rate of return on investments for Residual Income 13% Cost of capital 10% Income tax rate 40% Actual information concerning the company's performance for last year follows: Total assets at beginning of year $3,600,000 Total assets at end of year 5,400,000 Total invested capital (annual average) 8,000,000 Sales 9,000,000 Variable operating costs 3,650,000 Direct fixed costs 4,770,000 Allocated fixed costs 675,000 1. Compute X Solutions ROI, was the performance of the division acceptable?
X Solutions , a division of XYZ Corporation buys and installs aluminum windows. For the most recent year, the division had the following performance targets: Asset turnover 2.5 Profit margin 6% Target rate of return on investments for Residual Income 13% Cost of capital 10% Income tax rate 40% Actual information concerning the company's performance for last year follows: Total assets at beginning of year $3,600,000 Total assets at end of year 5,400,000 Total invested capital (annual average) 8,000,000 Sales 9,000,000 Variable operating costs 3,650,000 Direct fixed costs 4,770,000 Allocated fixed costs 675,000 1. Compute X Solutions ROI, was the performance of the division acceptable?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
X Solutions , a division of XYZ Corporation buys and installs aluminum windows. For the most recent year, the division had the following performance targets:
|
Asset turnover |
2.5 |
|
Profit margin |
6% |
|
Target rate of |
13% |
|
Cost of capital |
10% |
|
Income tax rate |
40% |
Actual information concerning the company's performance for last year follows:
|
Total assets at beginning of year |
$3,600,000 |
|
Total assets at end of year |
5,400,000 |
|
Total invested capital (annual average) |
8,000,000 |
|
Sales |
9,000,000 |
|
Variable operating costs |
3,650,000 |
|
Direct fixed costs |
4,770,000 |
|
Allocated fixed costs |
675,000 |
1. Compute X Solutions ROI, was the performance of the division acceptable?
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
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.Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education