Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Chapter 10, Problem 5TIF
a.
To determine
Identify the
b.
To determine
Compute the Specialty Products Division manager’s bonus for the past year.
c.
To determine
Compute the return on investment for the new product line.
d.
To determine
Explain the reason the manager of the Specialty Products Division decides to reject the new product line.
e.
To determine
Suggest an alternative performance measure for motivating division managers to accept new investment opportunities that would increase the overall company income and return on investment.
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Navarre Energy Research specializes in developing and commercializing new products. It is organized into two divisions,
which are based on the products they produce. Canal Division is smaller, and the lives of the products it produces tend to be
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table. Divisional investment is as of the beginning of the year. Navarre uses a(n) 8 percent cost of capital and beginning-of-
the-year investment when computing ROI and residual income. Ignore income taxes.
Allocated corporate overhead
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28,000
60,900
12,800
66,008
5,300
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38,800
400,000
72,000
180,000
7,600
R&D is assumed to have a three-year life in Canal Division and an eight-year life in Lake Division. All R&D expenditures are
spent at the beginning of the year. Assume…
What was the division’s ROI for the year?
Navarre Energy Research specializes in developing and commercializing new products. It is organized into two divisions, which are
based on the products they produce. Canal Division is smaller, and the lives of the products it produces tend to be shorter than those
produced by the larger Lake Division. Selected financial data for the past year are shown in the following table. Divisional investment is
as of the beginning of the year. Navarre uses an 8 percent cost of capital and beginning-of-the-year investment when computing ROI
and residual income. Ignore income taxes.
Allocated corporate overhead
Cost of goods sold
Divisional investment
RAD
Sales
Selling, general and administrative
(excluding R&D)
Division
Canal (5000)
$4,120
20,040
60,500
12,200
50,800
4,560
Lake (5000)
$9,400
29,600
398,000
31,800
190,000
7,500
R&D is assumed to have a three-year life in Canal Division and an eight-year life in Lake Division. All R&D expenditures are spent at the
beginning of the year. Assume there…
Chapter 10 Solutions
Managerial Accounting
Ch. 10 - Differentiate between centralized and...Ch. 10 - Differentiate between a profit center and an...Ch. 10 - Prob. 3DQCh. 10 - What is the major shortcoming of using operating...Ch. 10 - In a decentralized company in which the divisions...Ch. 10 - How does using the return on investment facilitate...Ch. 10 - (a) Explain how return on investment might lead a...Ch. 10 - Prob. 8DQCh. 10 - Prob. 9DQCh. 10 - When using the negotiated price approach to...
Ch. 10 - Budgetary performance for cost center Vinton...Ch. 10 - Support department allocations The centralized...Ch. 10 - Prob. 3BECh. 10 - Profit margin, investment turnover, and ROI Briggs...Ch. 10 - Residual income The Commercial Division of Galena...Ch. 10 - Prob. 6BECh. 10 - Budget performance reports for cost centers...Ch. 10 - The following data were summarized from the...Ch. 10 - For each of the following support departments,...Ch. 10 - Prob. 4ECh. 10 - Service department charges In divisional income...Ch. 10 - Varney Corporation, a manufacturer of electronics...Ch. 10 - Horton Technology has two divisions, Consumer and...Ch. 10 - Rocky Mountain Airlines Inc. has two divisions...Ch. 10 - Championship Sports Inc. operates two divisionsthe...Ch. 10 - Prob. 10ECh. 10 - The operating income and the amount of invested...Ch. 10 - Prob. 12ECh. 10 - The condensed income statement for the Consumer...Ch. 10 - The Walt Disney Company (DIS) has four business...Ch. 10 - Prob. 15ECh. 10 - Prob. 16ECh. 10 - Materials used by the Instrument Division of...Ch. 10 - Prob. 18ECh. 10 - GHT Tech Inc. sells electronics over the Internet....Ch. 10 - Profit center responsibility reporting for a...Ch. 10 - Prob. 3PACh. 10 - Effect of proposals on divisional performance A...Ch. 10 - Divisional performance analysis and evaluation The...Ch. 10 - Prob. 6PACh. 10 - Prob. 1PBCh. 10 - Prob. 2PBCh. 10 - Prob. 3PBCh. 10 - Prob. 4PBCh. 10 - Divisional performance analysis and evaluation The...Ch. 10 - Prob. 6PBCh. 10 - Prob. 1MADCh. 10 - Prob. 2MADCh. 10 - Papa Johns International, Inc. (PZZA), operates...Ch. 10 - Panera Bread Company (PNRA) operates over 2,000...Ch. 10 - Prob. 5MADCh. 10 - Prob. 1TIFCh. 10 - Prob. 2TIFCh. 10 - Prob. 3TIFCh. 10 - The three divisions of Yummy Foods are Snack...Ch. 10 - Prob. 5TIFCh. 10 - Prob. 1CMACh. 10 - Prob. 2CMACh. 10 - Prob. 3CMACh. 10 - Morrisons Plastics Division, a profit center,...
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