The following results are available for Division X and Y: Division X Division Y Profit before interest and tax P185 000 P172, 000 Capital employed P1, 540, 000 P1, 650, 000 The cost of capital is 10%. Calculate and comment on the performance of the departments based on: a. Return on capital employed b. Residual income
The following results are available for Division X and Y: Division X Division Y Profit before interest and tax P185 000 P172, 000 Capital employed P1, 540, 000 P1, 650, 000 The cost of capital is 10%. Calculate and comment on the performance of the departments based on: a. Return on capital employed b. Residual income
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 32E: Use the following information for Exercises 11-31 and 11-32: Washington Company has two divisions:...
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QUESTION 4
The following results are available for Division X and Y:
Division X Division Y
Profit before interest and tax P185 000 P172, 000
Capital employed P1, 540, 000 P1, 650, 000
The cost of capital is 10%.
Calculate and comment on the performance of the departments based on:
a. Return on capital employed
b. Residual income
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