7 5eBookAPrintSReferencesProblem 14-50 (Algo) Comparing Business Units Using Economic Value Added (EVA) (LO 14-4)Navarre Energy Research specializes in developing and commercializing new products. It is organized into two divisions, which arebased on the products they produce. Canal Division is smaller, and the lives of the products it produces tend to be shorter than thoseproduced by the larger Lake Division. Selected financial data for the past year are shown in the following table. Divisional investment isas of the beginning of the year. Navarre uses an 8 percent cost of capital and beginning-of-the-year investment when computing ROIand residual income. Ignore income taxes.Allocated corporate overheadCost of goods soldDivisional investmentR&DSalesSelling, general and administrative(excluding R&D)Economic value addedDivisionCanal ($000)$ 4,16520,13061,40012,65052,6004,695CanalDivisionR&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 thebeginning of the year. Assume there are no current liabilities and (unrealistically) that no R&D investments had taken place before thisyear.Lake ($000)$ 8,95028,700Required:a. Compute EVA for the two divisions.Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Enter your answers inthousands of dollars.LakeDivision393,50031,350200,0007,350

In corporate finance economic value added is a measurement of residual income/economic profit over…

Required: a. Compute EVA for the two divisions. Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Enter your answers in thousands of dollars. Economic value added Canal Division Lake Division

Required: a. Compute EVA for the two divisions. Note: Do not round intermediate calculations. Round your final answers to nearest whole dollar amount. Enter your answers in thousands of dollars. Economic value added Canal Division Lake Division

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter11: Performance Evaluation And Decentralization

Section: Chapter Questions

Problem 31E: Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions:...

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Check my work Problem 14-44 (Algo) Comparing Business Units Using Economic Value Added (EVA) (LO 14-4) Colonial Pharmaceuticals is a small firm specializing in new products. It is organized into two divisions, which are based on the products they produce. AC Division is smaller and the life of the products it produces tend to be shorter than those produced by the larger SO Division. Selected financial data for the past year is shown as follows. Divisional investment is as of the beginning of the year. Colonial Pharmaceuticals uses a 8 percent cost of capital and uses beginning-of-the-year investment when computing ROI and residual income. Ignore income taxes. AC Division sO Division Allocated corp. overhead Cost of goods sold 2$ 695 850 3,390 5,100 70,500 3,600 17,500 Divisional investment 10,900 2,950 11,800 R&D Sales SG&A 985 580 R&D is assumed to have a two-year life in the AC Division and a nine-year life in the SO division. All R&D expenditures are spent at the beginning of the…
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 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 Cost of goods sold Divisional investment R&D Sales Selling, general and administrative. (excluding R&D) Division Canal ($000) $4,900 28,000 60,900 12,800 66,008 5,300 Lake (5000) $ 10,000 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…
Required Information [The following Information applies to the questions displayed below.] Megamart provides the following Information on its two Investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 1. Compute return on Investment for each center. Using return on investment, which center is most efficient at using assets to generate Income? 2. Assume a target Income of 12% of average assets. Compute residual income for each center. Which center generated the most residual Income? 3. Assume the Electronics center is presented with a new Investment opportunity that will yield a 14% return on Investment. Should the new Investment opportunity be accepted? The target return is 12%. Complete this question by entering your answers in the tabs below. Numerator: Required 1 Required 2 Required 3 Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? Income $ 3,173,000…
$ 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 R&D Sales Selling, general and administrative (excluding R&D) Economic value added Canal (5000) $4,185 20,170 61,800 12,850 53,400 4,755 Canal Division Division 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 are no current…
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Required information [The following information applies to the questions displayed below.] Megamart provides the following information on its two investment centers. Investment Center Electronics Income $ 3,114,000 2,261,000 Average Assets $ 17,300,000 13,300,000 Sporting goods Sales $ 41,520,000 18,088,000 1. Compute return on investment for each center. Using return on investment, which center is most efficient at using assets to generate income? 2. Assume a target income of 11% of average assets. Compute residual income for each center. Which center generated the most residual income? 3. Assume the Electronics center is presented with a new investment opportunity that will yield a 14% return on investment. Should the new investment opportunity be accepted? The target return is 11%. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute return on investment for each center. Using return on investment, which center is most efficient…
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. Division Canal ($000) Lake ($000) Allocated corporate overhead $ 4,100 $ 9,600 Cost of goods sold 20,000 30,000 Divisional investment 60,100 400,000 R&D 12,000 32,000 Sales 50,000 100,000 Selling, general and administrative (excluding R&D) 4,500 8,000 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…
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. Division Canal ($000) Lake ($000) Allocated corporate overhead $ 4,100 $ 9,600 Cost of goods sold 20,000 30,000 Divisional investment 60,100 400,000 R&D 12,000 32,000 Sales 50,000 100,000 Selling, general and administrative (excluding R&D) 4,500 8,000 Required: Compute divisional income for the two divisions. Calculate the operating margin, which is equivalent to the return on sales,…
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