Financial and Managerial Accounting
15th Edition
ISBN: 9780357297162
Author: Carl S. Warren; Jefferson P. Jones; William B. Tayler, Ph.D., CMA
Publisher: Cengage Learning US
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Textbook Question
Chapter 24, Problem 3PB
Divisional income statements and
E.F. Lynch Company is a diversified investment company with three operating divisions organized as investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows:
The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.
Instructions
- 1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations.
- 2. Using the DuPont formula for return on investment, compute the profit margin, investment turnover, and return on investment for each division. Round percentages and the investment turnover to one decimal place.
- 3. If available funds permit the expansion of operations of only one division, which of the divisions would you recommend for expansion, based on parts (1) and (2)? Explain.
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Divisional Income Statements and Return on Investment Analysis
E.F. Lynch Company is a diversified investment company with three operating divisions organized as A decentralized unit in which the manager has the responsibility and authority to make decisions that affect not only costs and revenues but also the fixed assets invested in the center.investment centers. Condensed data taken from the records of the three divisions for the year ended June 30, 20Y8, are as follows:
Mutual FundDivision
ElectronicBrokerageDivision
InvestmentBankingDivision
Fee revenue
$2,510,000
$2,630,000
$2,510,000
Operating expenses
1,350,800
1,105,400
1,898,000
Invested assets
9,200,000
7,700,000
5,100,000
The management of E.F. Lynch Company is evaluating each division as a basis for planning a future expansion of operations.
Required:
1. Prepare condensed divisional income statements for the three divisions, assuming that there were no support department allocations.…
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answer in text form please (without image)
Chapter 24 Solutions
Financial and Managerial Accounting
Ch. 24 - Differentiate between centralized and...Ch. 24 - Differentiate between a profit center and an...Ch. 24 - Weyerhaeuser Co. (WY) developed a system that...Ch. 24 - What is the major shortcoming of using operating...Ch. 24 - In a decentralized company in which the divisions...Ch. 24 - Prob. 6DQCh. 24 - (a) Explain how return on investment might lead a...Ch. 24 - Prob. 8DQCh. 24 - When is the negotiated price approach preferred...Ch. 24 - Prob. 10DQ
Ch. 24 - Budgetary performance for cost center Vinton...Ch. 24 - Support department allocations The centralized...Ch. 24 - Prob. 3BECh. 24 - Profit margin, investment turnover, and ROI Briggs...Ch. 24 - Residual income Obj. The Commercial Division of...Ch. 24 - Transfer pricing The materials used by the...Ch. 24 - Budget performance reports for cost centers...Ch. 24 - The following data were summarized from the...Ch. 24 - Prob. 3ECh. 24 - Prob. 4ECh. 24 - Service department charges In divisional income...Ch. 24 - Varney Corporation, a manufacturer of electronics...Ch. 24 - Horton Technology has two divisions, Consumer and...Ch. 24 - Rocky Mountain Airlines Inc. has two divisions...Ch. 24 - Championship Sports Inc. operates two divisionsthe...Ch. 24 - The operating income and the amount of invested...Ch. 24 - The operating income and the amount of invested...Ch. 24 - Prob. 12ECh. 24 - The condensed income statement for the Consumer...Ch. 24 - Prob. 14ECh. 24 - Data are presented in the following table of...Ch. 24 - Prob. 16ECh. 24 - Materials used by the Instrument Division of...Ch. 24 - Prob. 18ECh. 24 - GHT Tech Inc. sells electronics over the Internet....Ch. 24 - Profit center responsibility reporting for a...Ch. 24 - Divisional income statements and return on...Ch. 24 - Effect of proposals on divisional performance A...Ch. 24 - Divisional performance analysis and evaluation The...Ch. 24 - Prob. 6PACh. 24 - Budget performance report for a cost center The...Ch. 24 - Profit center responsibility reporting for a...Ch. 24 - Divisional income statements and return on...Ch. 24 - Effect of proposals on divisional performance A...Ch. 24 - Prob. 5PBCh. 24 - Prob. 6PBCh. 24 - Kelly Kitchens operates both franchised and...Ch. 24 - Panera Bread Company (PNRA) operates over 2,000...Ch. 24 - Papa Johns International, Inc. (PZZA), operates...Ch. 24 - Panera Bread Company (PNRA) operates over 2,000...Ch. 24 - McDonalds Corporation (MCD) operates company-owned...Ch. 24 - Prob. 1TIFCh. 24 - Prob. 2TIFCh. 24 - Communication The Norse Division of Gridiron...Ch. 24 - The three divisions of Yummy Foods are Snack...Ch. 24 - Last Resort Industries Inc. is a privately held...Ch. 24 - Sara Bellows, manager of the telecommunication...Ch. 24 - Most firms allocate corporate and other support...Ch. 24 - Prob. 3CMACh. 24 - Prob. 4CMA
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