Return on investment (ROI): Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows: R O I = O p e r a t i n g I n c o m e A v e r a g e t o t a l a s s e t s R O I ( E x p a n d e d ) = O p e r a t i n g I n c o m e S a l e s × S a l e s A v e r a g e t o t a l a s s e t s Or R O I = P r o f i t M a r g i n R a t i o × A s s e t T u r n o v e r r a t i o Profit Margin Ratio: Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows: P r o f i t M a r g i n = O p e r a t i n g I n c o m e S a l e s Asset Turnover Ratio: Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows: A s s e t T u r n o v e r R a t i o = S a l e s A v e r a g e t o t a l a s s e t s Residual Income (RI): Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows: R e s i d u a l I n c o m e = O p e r a t i n g I n c o m e – ( A v e r a g e a s s e t s × R e q u i r e d r a t e o r R e t u r n ) Requirement-1: To calculate: ROI for each Division

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Answer 1

Question

Chapter 24, Problem P24.30APGA

To determine

Concept Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

$\begin{array}{l} R O I = \frac{O p e r a t i n g I n c o m e}{A v e r a g e t o t a l a s s e t s} \\ R O I (E x p a n d e d) = \frac{O p e r a t i n g I n c o m e}{S a l e s} \times \frac{S a l e s}{A v e r a g e t o t a l a s s e t s} \end{array}$

Or

$R O I = P r o f i t M a r g i n R a t i o \times A s s e t T u r n o v e r r a t i o$

Profit Margin Ratio:

Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:

$P r o f i t M a r g i n = \frac{O p e r a t i n g I n c o m e}{S a l e s}$

Asset Turnover Ratio:

Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:

$A s s e t T u r n o v e r R a t i o = \frac{S a l e s}{A v e r a g e t o t a l a s s e t s}$

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

$R e s i d u a l I n c o m e = O p e r a t i n g I n c o m e - (A v e r a g e a s s e t s \times R e q u i r e d r a t e o r R e t u r n)$

Requirement-1:

To calculate: ROI for each Division

To determine

Requirement-2:

To calculate: Profit Margin Ratio for each Division

To determine

Requirement-3:

To calculate: Asset Turnover Ratio for each Division

To determine

Requirement-4:

To calculate: ROI using the Expanded ROI formula

To determine

Requirement-5:

To calculate: The Residual Income (RI) for each division and recommendation

To determine

Requirement-6:

To describe: Some factors that management considers when setting the minimum target rate of return

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During 2015, the assets of Inspiring Sky increased by $45,000, and the liabilities increased by $20,000. If the owner's equity in Inspiring Sky is $100,000 at the end of 2015, the owner's equity at the beginning of 2015 must have been __.

Cullumber Company uses a job order cost system and applies overhead to production on the basis of direct labor costs. On January 1, 2025, Job 50 was the only job in process. The costs incurred prior to January 1 on this job were as follows: direct materials $16,800, direct labor $10,080, and manufacturing overhead $13,440. As of January 1, Job 49 had been completed at a cost of $75,600 and was part of finished goods inventory. There was a $12,600 balance in the Raw Materials Inventory account on January 1. During the month of January, Cullumber Company began production on Jobs 51 and 52, and completed Jobs 50 and 51. Jobs 49 and 50 were sold on account during the month for $102,480 and $132,720, respectively. The following additional events occurred during the month. 1. Purchased additional raw materials of $75,600 on account. 2. Incurred factory labor costs of $58,800. 3. Incurred manufacturing overhead costs as follows: depreciation expense on equipment $10,080; and various other…

Answer 2

Question

Chapter 24, Problem P24.30APGA

To determine

Concept Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

$\begin{array}{l} R O I = \frac{O p e r a t i n g I n c o m e}{A v e r a g e t o t a l a s s e t s} \\ R O I (E x p a n d e d) = \frac{O p e r a t i n g I n c o m e}{S a l e s} \times \frac{S a l e s}{A v e r a g e t o t a l a s s e t s} \end{array}$

Or

$R O I = P r o f i t M a r g i n R a t i o \times A s s e t T u r n o v e r r a t i o$

Profit Margin Ratio:

Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:

$P r o f i t M a r g i n = \frac{O p e r a t i n g I n c o m e}{S a l e s}$

Asset Turnover Ratio:

Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:

$A s s e t T u r n o v e r R a t i o = \frac{S a l e s}{A v e r a g e t o t a l a s s e t s}$

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

$R e s i d u a l I n c o m e = O p e r a t i n g I n c o m e - (A v e r a g e a s s e t s \times R e q u i r e d r a t e o r R e t u r n)$

Requirement-1:

To calculate: ROI for each Division

To determine

Requirement-2:

To calculate: Profit Margin Ratio for each Division

To determine

Requirement-3:

To calculate: Asset Turnover Ratio for each Division

To determine

Requirement-4:

To calculate: ROI using the Expanded ROI formula

To determine

Requirement-5:

To calculate: The Residual Income (RI) for each division and recommendation

To determine

Requirement-6:

To describe: Some factors that management considers when setting the minimum target rate of return

Expert Solution & Answer

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Answer 3

Question

Chapter 24, Problem P24.30APGA

To determine

Concept Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

$\begin{array}{l} R O I = \frac{O p e r a t i n g I n c o m e}{A v e r a g e t o t a l a s s e t s} \\ R O I (E x p a n d e d) = \frac{O p e r a t i n g I n c o m e}{S a l e s} \times \frac{S a l e s}{A v e r a g e t o t a l a s s e t s} \end{array}$

Or

$R O I = P r o f i t M a r g i n R a t i o \times A s s e t T u r n o v e r r a t i o$

Profit Margin Ratio:

Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:

$P r o f i t M a r g i n = \frac{O p e r a t i n g I n c o m e}{S a l e s}$

Asset Turnover Ratio:

Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:

$A s s e t T u r n o v e r R a t i o = \frac{S a l e s}{A v e r a g e t o t a l a s s e t s}$

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

$R e s i d u a l I n c o m e = O p e r a t i n g I n c o m e - (A v e r a g e a s s e t s \times R e q u i r e d r a t e o r R e t u r n)$

Requirement-1:

To calculate: ROI for each Division

To determine

Requirement-2:

To calculate: Profit Margin Ratio for each Division

To determine

Requirement-3:

To calculate: Asset Turnover Ratio for each Division

To determine

Requirement-4:

To calculate: ROI using the Expanded ROI formula

To determine

Requirement-5:

To calculate: The Residual Income (RI) for each division and recommendation

To determine

Requirement-6:

To describe: Some factors that management considers when setting the minimum target rate of return

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 4

Question

Chapter 24, Problem P24.30APGA

To determine

Concept Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

$\begin{array}{l} R O I = \frac{O p e r a t i n g I n c o m e}{A v e r a g e t o t a l a s s e t s} \\ R O I (E x p a n d e d) = \frac{O p e r a t i n g I n c o m e}{S a l e s} \times \frac{S a l e s}{A v e r a g e t o t a l a s s e t s} \end{array}$

Or

$R O I = P r o f i t M a r g i n R a t i o \times A s s e t T u r n o v e r r a t i o$

Profit Margin Ratio:

Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:

$P r o f i t M a r g i n = \frac{O p e r a t i n g I n c o m e}{S a l e s}$

Asset Turnover Ratio:

Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:

$A s s e t T u r n o v e r R a t i o = \frac{S a l e s}{A v e r a g e t o t a l a s s e t s}$

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

$R e s i d u a l I n c o m e = O p e r a t i n g I n c o m e - (A v e r a g e a s s e t s \times R e q u i r e d r a t e o r R e t u r n)$

Requirement-1:

To calculate: ROI for each Division

To determine

Requirement-2:

To calculate: Profit Margin Ratio for each Division

To determine

Requirement-3:

To calculate: Asset Turnover Ratio for each Division

To determine

Requirement-4:

To calculate: ROI using the Expanded ROI formula

To determine

Requirement-5:

To calculate: The Residual Income (RI) for each division and recommendation

To determine

Requirement-6:

To describe: Some factors that management considers when setting the minimum target rate of return

Expert Solution & Answer

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Check out a sample textbook solution

See solution

Answer 5

Chapter 24, Problem P24.30APGA

To determine

Concept Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

$\begin{array}{l} R O I = \frac{O p e r a t i n g I n c o m e}{A v e r a g e t o t a l a s s e t s} \\ R O I (E x p a n d e d) = \frac{O p e r a t i n g I n c o m e}{S a l e s} \times \frac{S a l e s}{A v e r a g e t o t a l a s s e t s} \end{array}$

Or

$R O I = P r o f i t M a r g i n R a t i o \times A s s e t T u r n o v e r r a t i o$

Profit Margin Ratio:

Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:

$P r o f i t M a r g i n = \frac{O p e r a t i n g I n c o m e}{S a l e s}$

Asset Turnover Ratio:

Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:

$A s s e t T u r n o v e r R a t i o = \frac{S a l e s}{A v e r a g e t o t a l a s s e t s}$

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

$R e s i d u a l I n c o m e = O p e r a t i n g I n c o m e - (A v e r a g e a s s e t s \times R e q u i r e d r a t e o r R e t u r n)$

Requirement-1:

To calculate: ROI for each Division

To determine

Requirement-2:

To calculate: Profit Margin Ratio for each Division

To determine

Requirement-3:

To calculate: Asset Turnover Ratio for each Division

To determine

Requirement-4:

To calculate: ROI using the Expanded ROI formula

To determine

Requirement-5:

To calculate: The Residual Income (RI) for each division and recommendation

To determine

Requirement-6:

To describe: Some factors that management considers when setting the minimum target rate of return

Answer 6

Chapter 24, Problem P24.30APGA

To determine

Concept Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

$\begin{array}{l} R O I = \frac{O p e r a t i n g I n c o m e}{A v e r a g e t o t a l a s s e t s} \\ R O I (E x p a n d e d) = \frac{O p e r a t i n g I n c o m e}{S a l e s} \times \frac{S a l e s}{A v e r a g e t o t a l a s s e t s} \end{array}$

Or

$R O I = P r o f i t M a r g i n R a t i o \times A s s e t T u r n o v e r r a t i o$

Profit Margin Ratio:

Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:

$P r o f i t M a r g i n = \frac{O p e r a t i n g I n c o m e}{S a l e s}$

Asset Turnover Ratio:

Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:

$A s s e t T u r n o v e r R a t i o = \frac{S a l e s}{A v e r a g e t o t a l a s s e t s}$

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

$R e s i d u a l I n c o m e = O p e r a t i n g I n c o m e - (A v e r a g e a s s e t s \times R e q u i r e d r a t e o r R e t u r n)$

Requirement-1:

To calculate: ROI for each Division

Answer 7

Chapter 24, Problem P24.30APGA

To determine

Concept Introduction:

Return on investment (ROI):

Return on investment is a profitability ratio that represents the percentage return on the investment made. It is calculated by dividing the Net Income by the Average total assets. The formulas to calculate the ROI are as follows:

$\begin{array}{l} R O I = \frac{O p e r a t i n g I n c o m e}{A v e r a g e t o t a l a s s e t s} \\ R O I (E x p a n d e d) = \frac{O p e r a t i n g I n c o m e}{S a l e s} \times \frac{S a l e s}{A v e r a g e t o t a l a s s e t s} \end{array}$

Or

$R O I = P r o f i t M a r g i n R a t i o \times A s s e t T u r n o v e r r a t i o$

Profit Margin Ratio:

Profit Margin Ratio is a profitability ratio that represents the percentage income earned on the sales. It is calculated by dividing the Net Income by the Sales. The formulas to calculate the Profit margin is as follows:

$P r o f i t M a r g i n = \frac{O p e r a t i n g I n c o m e}{S a l e s}$

Asset Turnover Ratio:

Asset Turnover Ratio is an efficiency ratio that represents the sales earned on the average assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Asset Turnover Ratio is as follows:

$A s s e t T u r n o v e r R a t i o = \frac{S a l e s}{A v e r a g e t o t a l a s s e t s}$

Residual Income (RI):

Residual Income is the income earned over and above the expected rate of return on assets invested in the business. It is calculated by dividing the Sales by Average total assets. The formulas to calculate the Residual Income is as follows:

$R e s i d u a l I n c o m e = O p e r a t i n g I n c o m e - (A v e r a g e a s s e t s \times R e q u i r e d r a t e o r R e t u r n)$

Requirement-1:

To calculate: ROI for each Division

Answer 8

To determine

Requirement-2:

To calculate: Profit Margin Ratio for each Division

Answer 9

To determine

Requirement-2:

To calculate: Profit Margin Ratio for each Division

Answer 10

To determine

Requirement-3:

To calculate: Asset Turnover Ratio for each Division

Answer 11

To determine

Requirement-3:

To calculate: Asset Turnover Ratio for each Division

Answer 12

To determine

Requirement-4:

To calculate: ROI using the Expanded ROI formula

Answer 13

To determine

Requirement-4:

To calculate: ROI using the Expanded ROI formula

Answer 14

To determine

Requirement-5:

To calculate: The Residual Income (RI) for each division and recommendation

Answer 15

To determine

Requirement-5:

To calculate: The Residual Income (RI) for each division and recommendation

Answer 16

To determine

Requirement-6:

To describe: Some factors that management considers when setting the minimum target rate of return

Answer 17

To determine

Requirement-6:

To describe: Some factors that management considers when setting the minimum target rate of return

Answer 18

Expert Solution & Answer

Answer 19

Expert Solution & Answer

Answer 20

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Answer 21

Ch. 24 - Prob. 1QC Ch. 24 - Which is not one of the potential advantages of...Ch. 24 - The Quaker Foods division of PepsiCo is most...Ch. 24 - Which of the following is not a goal of...Ch. 24 - Which of the following balanced scorecard...Ch. 24 - The performance evaluation of a cost center is...Ch. 24 - Prob. 7QC Ch. 24 - Prob. 8QC Ch. 24 - Prob. 9QC Ch. 24 - Prob. 10QC

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Requirement-2:

To calculate: Profit Margin Ratio for each Division

Requirement-3:

To calculate: Asset Turnover Ratio for each Division

Requirement-4:

To calculate: ROI using the Expanded ROI formula

Requirement-5:

To calculate: The Residual Income (RI) for each division and recommendation

Requirement-6:

To describe: Some factors that management considers when setting the minimum target rate of return

Want to see the full answer?

Chapter 24 Solutions

Videos

Requirement-2: To calculate: Profit Margin Ratio for each Division

Requirement-3: To calculate: Asset Turnover Ratio for each Division

Requirement-4: To calculate: ROI using the Expanded ROI formula

Requirement-5: To calculate: The Residual Income (RI) for each division and recommendation

Requirement-6: To describe: Some factors that management considers when setting the minimum target rate of return

Want to see the full answer?

Chapter 24 Solutions

Requirement-2:

To calculate: Profit Margin Ratio for each Division

Requirement-3:

To calculate: Asset Turnover Ratio for each Division

Requirement-4:

To calculate: ROI using the Expanded ROI formula

Requirement-5:

To calculate: The Residual Income (RI) for each division and recommendation

Requirement-6:

To describe: Some factors that management considers when setting the minimum target rate of return