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Introduction:
Return on Investment (ROI) is a performance measure, which is used to evaluate the efficiency of an investment.It measures the amount of return on an investment, in relation to the investment's cost.
Profit Margin:
Profit margin is a profitability ratio which calculates the relation between net income and sales.
Investment Turnover:
Asset or Investment turnover ratio measures the sales generated by a company relative to the value of its assets. It is used as an indicator of the efficiency with which a company is deploying its assets in generating revenue.
To Calculate:
Requirement 1:
Return on Investment of both divisions
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Answer to Problem 12E
Solution:
Beverage Division = 13.28%
Cheese Division = 14.32%
Explanation of Solution
Beverage Division
Cheese Division
Cheese Division has better ROI.
Requirement 2:
Profit Margin of both divisions
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Chapter 24 Solutions
Connect Access Card For Fundamental Accounting Principles
- Can you help me with accounting questionsarrow_forwardA company purchases a machine for $150,000. It is estimated that the machine has a useful life of 10 years and will then be sold for $12,0000. Using the straight-line method, calculate the annual depreciation expense to be charged for each year of useful life. A. $13,800 B. $1,380 C. $12,500 D. $15,000 MCQarrow_forwardWalton Chicken Corporation processes and packages chicken for grocery stores. It purchases chickens from farmers and processes them into two different products: chicken drumsticks and chicken steak. From a standard batch of 23,000 pounds of raw chicken that costs $15, 600, the company produces two parts: 4,000 pounds of drumsticks and 6,000 pounds of breast for a processing cost of $ 3,384. The chicken breast is further processed into 5,200 pounds of steak for a processing cost of $3,200. The market price of drumsticks per pound is $1.75 and the market price per pound of chicken steak is $5.20. If Walton decided to sell chicken breast instead of chicken steak, the price per pound would be $2.60. Product Allocation Rate x Weight of Base Allocated Cost Drumsticks $1.90 x 4,000 = $7,600 Chicken breast 1.90 x 6,000 = 11,400 Total allocated cost $19,000 Chicken Drumsticks Chicken Breast Revenue $7,000 $15,600 Cost of goods sold 7,600 11,400 Gross margin $(600) $4,200 Reallocate the joint…arrow_forward
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