Meiji Isetan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Required 1 Required 2 Required: . For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 12%. Compute the residual income for each division. 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Complete this question by entering your answers in the tabs below. ROI Osaka $ 9,100,000 $ 455,000 $ 2,275,000 Osaka % Division Required 3 For each division, compute the return on investment (ROI) in terms of margin and turnover. Yokohama Yokohama $ 21,000,000 $ 1,470,000 $ 10,500,000 % < Required 1 Required 2 >

Meiji Isetan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Required 1 Required 2 Required: . For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 12%. Compute the residual income for each division. 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Complete this question by entering your answers in the tabs below. ROI Osaka $ 9,100,000 $ 455,000 $ 2,275,000 Osaka % Division Required 3 For each division, compute the return on investment (ROI) in terms of margin and turnover. Yokohama Yokohama $ 21,000,000 $ 1,470,000 $ 10,500,000 % < Required 1 Required 2 >

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter10: Decentralization: Responsibility Accounting, Performance Evaluation, And Transfer Pricing

Section: Chapter Questions

Problem 16E: A multinational corporation has a number of divisions, two of which are the North American Division...

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A multinational corporation has a number of divisions, two of which are the North American Division and the Pacific Rim Division. Data on the two divisions are as follows: Round all rates of return to four significant digits. Required: 1. Compute residual income for each division. By comparing residual income, is it possible to make a useful comparison of divisional performance? Explain. 2. Compute the residual rate of return by dividing the residual income by the average operating assets. Is it possible now to say that one division outperformed the other? Explain. 3. Compute the return on investment for each division. Can we make meaningful comparisons of divisional performance? Explain. 4. Add the residual rate of return computed in Requirement 2 to the required rate of return. Compare these rates with the ROI computed in Requirement 3. Will this relationship always be the same?
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Required 1 Required 2 Required: 1. For each division, compute the return on investment (ROI). 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division. Complete this question by entering your answers in the tabs below. ROI Osaka $ 10,100,000 $ 808,000 $ 2,525,000 Osaka Division For each division, compute the return on investment (ROI). % Yokohama $ 31,000,000 $ 3,100,000 $ 15,500,000 Yokohama %
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Required 1 Required 2 Required: 1. For each division, compute the return on investment (ROI). 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 18%. Compute the residual income for each division. Complete this question by entering your answers in the tabs below. ROI Osaka $ 9,400,000 $ 752,000 $ 2,350,000 Osaka Division For each division, compute the return on investment (ROI). % Yokohama $ 24,000,000 $ 2,400,000 $8,000,000 Yokohama %
S Meiji Isetan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow Sales Net operating income Average operating assets Required 1 Required 2 Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division. 3. Is Yokohama's greater amount of residual income an indication that it is better managed? Osaka $ 9,900,000 $ 792,000 $ 2,475,000 Complete this question by entering your answers in the tabs below. ROI % Division Required 3 For each division, compute the return on investment (ROI) in terms of margin and turnover. Osaka Yokohama $ 29,000,000 $ 2,900,000 $ 14,500,000 Yokohama %
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income Average operating assets Division Osaka $ 10,100,000 $ 808,000 $ 2,525,000 Yokohama $ 31,000,000 $ 3,100,000 $ 15,500,000 Required: 1. For each division, compute the return on investment (ROI). 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 17%. Compute the residual income for each division.
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Set operating income. Average operating assets Required: 1. For each division, compute the return on investment (ROI). 2. Compute the residual income for each division assuming the company's minimum required rate of return is 16%. Complete this question by entering your answers in the tabs below. Division Osaka Yokohana $9,600,000 $ 26,000,000 $672,000 $2,340,000 $3,200,000 $ 13,000,000 Required 1 Required 2 For each division, compute the return on investment (ROI). RO Osaka Yokohama Required Required 2 >
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Sales Net operating income. Average operating assets Required 1 Required: 1. For each division, compute the return on investment (ROI). 2. Compute the residual income for each division assuming the company's minimum required rate of return is 15%. Division Complete this question by entering your answers in the tabs below. Required 2 Residual income Osaka $ 10,500,000 $630,000 $ 3,500,000 Osaka Yokohama $ 35,000,000 $ 2,800,000 $ 17,500,000 Compute the residual income for each division assuming the company's minimum required rate of return is 15%. Yokohama
Selected sales and operating data for three divisions of different structural engineering firms are given as follows: 2. Compute the residual income (loss) for each division. 3. Assume that each division is presented with an investment opportunity that would yield a 7% rate of return. a. If performance is being measured by ROI, which division or divisions will probably accept or reject the opportunity? b. If performance is being measured by residual income, which division or divisions will probably accept or reject the opportunity? Division A Division B Division C Sales $ 15,950,000 $ 28,760,000 $ 25,950,000 Average operating assets $ 3,190,000 $ 7,190,000 $ 5,190,000 Net operating income $ 733,700 $ 373,880 $ 752,550 Minimum required rate of return 6.00 % 6.50 % 14.50 %
1. For each division, compute the return on investment (ROI) in terms of margin and turnover. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 12%. Compute the residual income for each division. 3. Is Yokohama's greater amount of residual income an indication that it is better managed?
Contrasting Return on Investment (ROI) and Residual Income Meiji Isetan Corp. of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow: Required: 1. For each division, compute the return on investment (ROI) in terms of margin and turnover. Where necessary, carry computations to two decimal places. 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division. 3. Is Yokohama’s greater amount of residual income an indication that it is better managed? Explain.
Required: 1. Compute the ROI for each division. 2. Assume that the company evaluates performance by use of residual income and that the minimum required return for any division is 16%. Compute the residual income for each division.
Tan Corporation of Japan has two regional divisions with headquarters in Osaka and Yokohama. Selected data on the two divisions follow Sales Net operating Income Average operating assets Required 11 Required 2 Division Osaka $ 10,000,000 $ 648,000. Required: 1. For each division, compute the return on investment (ROI). 2. Assume that the company evaluates performance using residual income and that the minimum required rate of return for any division is 15%. Compute the residual income for each division. Complete this question by entering your answers in the tabs below. ROI Yokohama $ 38,000,000 $3,040,000 $3,600,000 $ 19,000,000 For each division, compute the return on investment (ROI). Osaka Yokohama % Required 2 >