HORNGRENS COST ACCOUNTING W/ACCESS
16th Edition
ISBN: 9781323687604
Author: Datar
Publisher: PEARSON
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Chapter 23, Problem 23.33P
Nature’s Juice estimates the useful life of each plant to be 12 years, with no terminal disposal value. The
| 2007 | 2014 | 2016 | 2017 |
| 100 | 120 | 185 | 200 |
Given the high turnover of current assets, management believes that the historical-cost and current-cost measures of current assets are approximately the same.
- 1. Compute the ROI ratio (operating income to total assets) of each division using historical-cost measures. Comment on the results.
Required
- 2. Use the approach in Figure 23-2 (page 902) to compute the ROI of each division, incorporating current-cost estimates as of 2017 for depreciation expense and long-term assets. Comment on the results.
- 3. What advantages might arise from using current-cost asset measures as compared with historical-cost measures for evaluating the performance of the managers of the three divisions?
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[The following information applies to the questions displayed below.]
Astro Co. sold 19,200 units of its only product and incurred a $43,072 loss (ignoring taxes) for the current year, as shown
here. During a planning session for year 2020's activities, the production manager notes that variable costs can be
reduced 50% by installing a machine that automates several operations. To obtain these savings, the company must
increase its annual fixed costs by $142,000. The maximum output capacity of the company is 40,000 units per year.
ASTRO COMPANY
Contribution Margin Income Statement
For Year Ended December 31, 2019
$704,640
563,712
Sales
Variable costs
Contribution margin
Fixed costs
140,928
184,000
Net loss
$(43,072)
Compute the sales level required in both dollars and units to earn $120,000 of target pretax income in 2020 with the machine
stalled and no change in unit sales price. (Do not round intermediate calculations. Round your answers to 2 decimal places.
pund "Contribution margin…
Chapter 23 Solutions
HORNGRENS COST ACCOUNTING W/ACCESS
Ch. 23 - Prob. 23.1QCh. 23 - Prob. 23.2QCh. 23 - What factors affecting ROI does the DuPont method...Ch. 23 - RI is not identical to ROI, although both measures...Ch. 23 - Describe EVA.Ch. 23 - Give three definitions of investment used in...Ch. 23 - Distinguish between measuring assets based on...Ch. 23 - Prob. 23.8QCh. 23 - Why is it important to distinguish between the...Ch. 23 - Prob. 23.10Q
Ch. 23 - Managers should be rewarded only on the basis of...Ch. 23 - Explain the role of benchmarking in evaluating...Ch. 23 - Explain the incentive problems that can arise when...Ch. 23 - Prob. 23.14QCh. 23 - Prob. 23.15QCh. 23 - During the current year, a strategic business unit...Ch. 23 - Assuming an increase in price levels over time,...Ch. 23 - If ROI Is used to evaluate a managers performance...Ch. 23 - The Long Haul Trucking Company is developing...Ch. 23 - ABC Inc. desires to maintain a capital structure...Ch. 23 - ROI, comparisons of three companies. (CMA,...Ch. 23 - Prob. 23.22ECh. 23 - ROI and RI. (D. Kleespie, adapted) The Sports...Ch. 23 - ROI and RI with manufacturing costs. Excellent...Ch. 23 - ROI, RI, EVA. Hamilton Corp. is a reinsurance and...Ch. 23 - Goal incongruence and ROI. Comfy Corporation...Ch. 23 - ROI, RI, EVA. Performance Auto Company operates a...Ch. 23 - Capital budgeting, RI. Ryan Alcoa, a new associate...Ch. 23 - Prob. 23.29ECh. 23 - ROI, RI, EVA, and performance evaluation. Cora...Ch. 23 - Prob. 23.31ECh. 23 - Prob. 23.32ECh. 23 - ROI performance measures based on historical cost...Ch. 23 - ROI, measurement alternatives for performance...Ch. 23 - Multinational firms, differing risk, comparison of...Ch. 23 - ROI, Rl, DuPont method, investment decisions,...Ch. 23 - Division managers compensation, levers of control...Ch. 23 - Executive compensation, balanced scorecard. Acme...Ch. 23 - Financial and nonfinancial performance measures,...Ch. 23 - Prob. 23.40PCh. 23 - Prob. 23.41PCh. 23 - RI, EVA, measurement alternatives, goal...
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