XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: (Click the icon to view the information.) Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI? First enter the formula, then calculate each divisions residual income. Data table Snow Sports Non-Snow Sports Sales $ 5,100,000 $ 8,200,000 $ ) = Residual income Operating Income Total Assets Current Liabilities ROI 867,000 $ 1,394,000 $ 4,000,000 $ 6,200,000 $ 720,000 420,000 21.7% 22.5% XTreme's management has specified a target 13% rate of return. ☑

XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: (Click the icon to view the information.) Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI? First enter the formula, then calculate each divisions residual income. Data table Snow Sports Non-Snow Sports Sales $ 5,100,000 $ 8,200,000 $ ) = Residual income Operating Income Total Assets Current Liabilities ROI 867,000 $ 1,394,000 $ 4,000,000 $ 6,200,000 $ 720,000 420,000 21.7% 22.5% XTreme's management has specified a target 13% rate of return. ☑

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter7: Cost-volume-profit Analysis

Section: Chapter Questions

Problem 53P: Aldovar Company produces a variety of chemicals. One division makes reagents for laboratories. The...

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5. XTreme Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: ¹(Click the icon to view the information.) Compute each division's residual income. Interpret your results. Are your results consistent with each division's ROI? First enter the formula, then calculate each divisions residual income. (1) (2) Snow Non-Snow Interpret your results. This result is (6). 1: Data Table XTreme's management has specified a target 15% rate of return. (1) O with the ROI calculations. O Capital turnover O Current liabilities O Operating income Both divisions have (4) residual income. This means that the divisions are earning income at a rate that (5). Are your results consistent with each division's ROI? O Sales O Total…
Adrenaline Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: (Click the icon to view the information.) Read the requirements. 1. Compute each division's sales margin. Interpret your results. First enter the formula, then calculate each divisions sales margin. (Enter the sales margin as a percent rounded to the nearest whole percent.) Sales margin Data table Snow Sports Non-Snow Sports Adrenaline's management has specified a target 14% rate of return. Sales $ 5,600,000 $ $ 8,700,000 $ et more help. Operating Income 952,000 $ 1.479,000 $ Print C Total Assets Current Liabilities 4,300,000 $ 6,300,000 $ Done 410,000 710,000 Requirements X 1. Compute each division's sales margin. Interpret your results. 2.…
Driver Sports Company makes snowboards, downhill skis, cross-country skis, skateboards, surfboards, and in-line skates. The company has found it beneficial to split operations into two divisions based on the climate required for the sport: Snow Sports and Non-Snow Sports. The following divisional information is available for the past year: E (Click the icon to view the information.) Read the requirements. Requirements Data table 1. Calculate each division's ROI. Sales Operating Income Total Assets Current Liabilities 2. Top management has extra funds to invest. Which division will most likely receive those funds? Why? 3. Can you explain why one division's ROI is higher? How could management gain more insight? Snow Sports $ 5,300,000 $ 990,000 $ 4,400,000 $ 400,000 Non-Snow Sports 8,400,000 $ 816,000 $ 3,400,000 $ 650,000 Driver's management has specified a target 15% rate of return. Print Done Print Done
Zachs, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional information was available for the past year: 1(Click the icon to view the information.) Calculate each division's RI. Interpret your results. First, select the formula to calculate residual income (RI). (1) – ( (2) × (3) ) = RI The residential division's RI is . The professional division's RI is . (4) exceeding management's expectations. 1: Data Table Net Sales Revenue Operating Income Average Total Assets Residential $570,000 $64,600 $190,000 Professional 1,090,000 164,000 400,000 Management has a 27% target rate of return for each division. (1) Asset turnover ratio Average total assets Net sales revenue Operating…
Zuds, Helpful Hardware's manufacturing division of lawn-mowing and snow removal equipment, segments its business according to customer type: Professional and Residential. The following divisional information was available for the past year. View the divisional information. Requirements Round all of your answers to four decimal places. 1. Calculate each division's ROI. 2. Calculate each division's profit margin. Interpret your results. 3. Calculate each division's asset turnover. Interpret your results. 4. Use the expanded ROI formula to confirm your results from Requirement 1. What can you conclude?
, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: Professional and Residential. Assume the following divisional information was available for the past year (in thousands of dollars):
Dantrell Palmer has just been appointed manager of Kirchner Glass Products Division. He has two years to make the division profitable. If the division is still showing a loss after two years, it will be eliminated, and Dantrell will be reassigned as an assistant divisional manager in another division. The divisional income statement for the most recent year is as follows: Upon arriving at the division, Dantrell requested the following data on the divisions three products: He also gathered data on a proposed new product (Product D). If this product is added, it would displace one of the current products; the quantity that could be produced and sold would equal the quantity sold of the product it displaces, although demand limits the maximum quantity that could be sold to 20,000 units. Because of specialized production equipment, it is not possible for the new product to displace part of the production of a second product. The information on Product D is as follows: Required: 1. Prepare segmented income statements for Products A, B, and C. 2. Determine the products that Dantrell should produce for the coming year. Prepare segmented income statements that prove your combination is the best for the division. By how much will profits improve given the combination that you selected? (Hint: Your combination may include one, two, or three products.)
Kalu Company, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional information was available for the past year: View the information. Management has a 23% target rate of retum for each division. Calculate each division's RI. Interpret your results. First, select the formula to calculate residual income (RI). Residual income= Residential division's Ri= Professional division's RI 196000 exceeding management's expectations. COO Information Net Sales Revenue Residential $ Professional Operating Income 600,000 $ 1,180,000 Print 66,640 S 162,360 Done 1 Average Total Assets 196.000 396,000 X
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Nogo Motors, Inc., has several divisions that often purchase component parts from each other. The company is fully decentralized and each division is selling to other divisions or in outside markets. Each division makes its decision on where to buy and sell in conformity with divisional goals. Igo Division purchases most of its airbags from Letgo Division. The managers of these two divisions are currently negotiating a transfer price for the airbags for next year, when the airbag will be standard equipment on all Igo vehicles. Letgo Division prepared the following financial information for negotiating purposes: Costs of airbag as manufactured by Letgo: Direct materials costs P 40 55 Direct manufacturing labor costs Variable manufacturing overhead costs 10 Fixed manufacturing overhead costs Variable marketing costs Fixed marketing costs Fixed administrative costs Total costs 25 5 15 10 P160 Letgo Division is currently working at 80% of its capacity. Letgo's policy is to achieve an…
Performance Auto Company operates a new car division (that sells high performance sports cars) and a performance parts division (that sells performance-improvement parts for family cars). Some division financial measures for 2017 are as follows: E (Click the icon to view the data.) Read the requirements. Data table rounded to one decimal place in the format X.X%.) Requirements New Car Performance 1. Calculate return on investment (ROI) for each division using operating income as a measure of income and total assets as a measure of investment. Division Parts Division 2. Calculate residual income (RI) for each division using operating income as a Total assets 2$ 35,000,000 $ 32,312,500 measure of income and total assets minus current liabilities as a measure of investment. Current liabilities 2$ 6,500,000 $ ৪,000,000 3. William Abraham, the New Car Division manager, argues that the performance parts division has "loaded up on a lot of short-term debt" to boost its RI. Operating income $4…
Compute the residual income for the Manufacturing Division. Greenlink, Inc. produces environment-friendly construction material. The following information is available about the status and operations of the Manufacturing Division of Greenlink, which has a hurdle rate (minimum required rate of return) of 7%. Divisional identifiable average assets $ 414,459 Divisional income from operations $ 18,848 Divisional sales revenue $ 365,726