Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
expand_more
expand_more
format_list_bulleted
Videos
Textbook Question
Chapter 14, Problem 3SEQ
Division A of Kern Co. has sales of $350,000, cost of goods sold of $200,000, operating expenses of $30,000, and invested assets of $600000. What is the
A. 20%
B. 25%
C. 33%
D. 40%
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Kyle Corporation provides the following information for the Product Division and Service Division for the year.
Product Division Service Division
420,000 $
650,000
195,000
245,000
640,000
610,000
14.0%
14.0%
Net sales
Operating income
Average total assets
Target rate of return
$
Requirement 1. Calculate the return on investment for each division. (Enter answers as a percent rounded to the nearest hundredth percent, X.XX%)
The return on investment for the Product Division is
The return on investment for the Service Division is
Requirement 2. Which division has the highest ROI?
%
%
Requirement 3. Calculate the residual income for each division. (Round answers to the nearest whole dollar.)
The residual income for the Product Division is
The residual income for the Service Division is
Requirement 4. Which division has the highest residual income?
Division Y has generated sales revenue of $260,000 and achieved operating income of $18,500 using $20,000 of invested assets. If management desires a minimum rate of return of 10%, the profit margin would be _____.
a.14.4%
b.19.5%
c.7.1%
d.10.2%
Division A of Kern Co. has sales of $350,000, cost of goods sold for $200,000, operating expenses of $30,000, and invested assets of $600,000. What is the return on investment for Division A?
Answer: $______________
Explain your answer: _____________________
Chapter 14 Solutions
Survey of Accounting (Accounting I)
Ch. 14 - When the manager has the responsibility and...Ch. 14 - The Accounts Payable Department has expenses of...Ch. 14 - Division A of Kern Co. has sales of $350,000, cost...Ch. 14 - Division L of Liddy Co. has a return on investment...Ch. 14 - Which approach to transfer pricing uses the price...Ch. 14 - Prob. 1CDQCh. 14 - Prob. 2CDQCh. 14 - Prob. 3CDQCh. 14 - Prob. 4CDQCh. 14 - Weyerhaeuser developed a system that assigns...
Ch. 14 - What is the major shortcoming of using operating...Ch. 14 - Prob. 7CDQCh. 14 - In a decentralized company in which the divisions...Ch. 14 - Prob. 9CDQCh. 14 - Prob. 10CDQCh. 14 - Prob. 11CDQCh. 14 - Prob. 12CDQCh. 14 - Why would standard cost be a more appropriate...Ch. 14 - Prob. 14CDQCh. 14 - Budget performance reports for cost centers...Ch. 14 - Divisional income statements The following data...Ch. 14 - Prob. 14.3ECh. 14 - Prob. 14.4ECh. 14 - Service department charges In divisional income...Ch. 14 - Service department charges and activity bases...Ch. 14 - Divisional income statements with service...Ch. 14 - Corrections to service department charges Panda...Ch. 14 - Profit center responsibility reporting On-Demand...Ch. 14 - Prob. 14.10ECh. 14 - Prob. 14.11ECh. 14 - Prob. 14.12ECh. 14 - Profit margin, investment turnover, and return on...Ch. 14 - Prob. 14.14ECh. 14 - Determining missing items in return on investment...Ch. 14 - Prob. 14.16ECh. 14 - Prob. 14.17ECh. 14 - Prob. 14.18ECh. 14 - Budget performance report for a cost center Sneed...Ch. 14 - Budget performance report for a cost center Sneed...Ch. 14 - Profit center responsibility reporting A-One...Ch. 14 - Profit center responsibility reporting A-One...Ch. 14 - Profit center responsibility reporting A-One...Ch. 14 - Prob. 14.3.1PCh. 14 - Divisional income statements and return on...Ch. 14 - Prob. 14.3.3PCh. 14 - Prob. 14.4.1PCh. 14 - Prob. 14.4.2PCh. 14 - Prob. 14.4.3PCh. 14 - Effect of proposals on divisional performance A...Ch. 14 - Prob. 14.4.5PCh. 14 - Prob. 14.5.1PCh. 14 - Prob. 14.5.2PCh. 14 - Prob. 14.5.3PCh. 14 - Prob. 14.5.4PCh. 14 - Prob. 14.6.1PCh. 14 - Prob. 14.6.2PCh. 14 - Prob. 14.6.3PCh. 14 - Prob. 14.6.4PCh. 14 - Prob. 14.6.5PCh. 14 - Balanced scorecard American Express Company (AXP)...Ch. 14 - Balanced scorecard Several years ago. United...Ch. 14 - Balanced scorecard Delta Air Lines, Inc. (DAL)...Ch. 14 - Balanced scorecard Costco Wholesale Corporation...Ch. 14 - Prob. 14.5MBACh. 14 - Prob. 14.1CCh. 14 - Prob. 14.2CCh. 14 - Prob. 14.3.1CCh. 14 - Prob. 14.3.2CCh. 14 - Prob. 14.3.3CCh. 14 - Prob. 14.3.4CCh. 14 - Prob. 14.4.1CCh. 14 - Prob. 14.4.2CCh. 14 - Prob. 14.4.3CCh. 14 - Prob. 14.4.4CCh. 14 - Prob. 14.5.1CCh. 14 - Prob. 14.5.2CCh. 14 - Prob. 14.5.3CCh. 14 - Prob. 14.5.4CCh. 14 - Prob. 14.5.5CCh. 14 - Prob. 14.5.6C
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Similar questions
- Residual income The Commercial Division of Galena Company has operating income of 12,680,000 and assets of 74,500,000. The minimum acceptable return on assets is 12%. What is the residual income for the division?arrow_forwardJordan Company has two divisions, which reported the following results for the most recent year. Division I Division II Income ₱ 02,700,000 ₱ 00,600,000 Average invested capital ₱ 18,000,000 ₱ 03,000,000 ROI 15% 20% Imputed interest rate = 10% What is the residual income of Division II? Group of answer choices ₱ 0 ₱ 300,000 ₱ 900,000 ₱ 294,000arrow_forwardAssume that Division Blue has achieved a yearly income from operations of $157,000 using $956,000 of invested assets. If management has set a minimum acceptable rate of return of 10%, the residual income is a.$157,000 b.$49,120 c.$61,400 d.$73,680arrow_forward
- XYZ Company has two divisions, A and B. Information for each division is as follows A Net earnings for division P 40,000 P 260,000 Asset base for division P100,000 P1,200,000 Target rate of return 15% 18% Operating Margin (ROS) 10% 20% Weighted average cost of capital 12% 12% What is the return on investment for A? 1. 18% 2. 40% 3.20% 4. 15% O 1 O 2 3 O 4arrow_forwardThe Midwest Division of Grainger Company has average assets of $200,000 and income of $40,000. What is the return on investment for this division? Ⓒ500% -20% 25% 80%arrow_forwardAssume that Division Blue has achieved a yearly operating income of $162,000 using $973,000 of invested assets. If management has set a minimum acceptable return on investment of 7%, the residual income is a. $75,112 b.$112,668 c.$93,890 d.$162,000arrow_forward
- Consider the following data from two divisions of a company, P and Q: Divisional P Q Sales $ 2,000,000 $ 1,100,000 Operating Income $ 800,000 $ 660,000 Investment $ 3,200,000 $ 1,760,000 If the minimum rate of return is 9%, what is Division P's residual income (RI)?arrow_forwardPart I (1) What is residual income and how is it calculated? (2) Please use the information below to calculate the residual income for Divisions A and B, assuming that the company’s minimum rate of return is 15 percent. Income Invested Sales from Operations Assets Division A $500,000 $ 90,000 $400,000 Division B 800,000 144,000 600,000arrow_forwardThe following info is provided for three operating divisions. The minimum accepted rate of return by the investor is 7%. Division M N P invested assets 14,000,000 86,000,000 840,000 Compute Return on Investment for: a. Division M type your answer... b. Division N type your answer... c. Division P type your answer... sales net income Compute Residual Income for: 25,000,000 112,000,000 1,750,000 d. Division M$ type your answer... e. Division N $ f. Division P$ type your answer... type your answer... 50,000,000 250,000,000 6,000,000 g. What division looks like the best division? type your answer...arrow_forward
- Mason Division had $650,000 in invested assets, sales of $700,000, income from operations of $99,000, and a minimum acceptable return of 15%. The profit margin for Mason Division is a.7.1% b.15.2% c.14.1% d.20%arrow_forwardThe sales, income from operations, and invested assets for each division of Wren Company are as follows: Sales Income from Operations Invested Assets Division C $5,000,000 $630,000 $4,000,000 Division D 6,800,000 760,000 3,900,000 Division E 3,750,000 750,000 7,500,000 Management has established a minimum rate of return for invested assets of 10%. What is the Residual Income for Division C? What is the Residual Income for Division D? What is the Residual Income for Division E? Based on Residual Income, Division __?__ is the most profitable.arrow_forwardXYZ Company has two divisions, A and B. Information for each division is as follows A B Net earnings for division P 40,000 P 260,000 Asset base for division P100,000 P1,200,000 Target rate of return 15% 18% Operating Margin (ROS) 10% 20% Weighted average cost of capital 12% 12% What is the return on investment for A? 18% 40% 20% 15%…arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Survey of Accounting (Accounting I)AccountingISBN:9781305961883Author:Carl WarrenPublisher:Cengage Learning
Managerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
Survey of Accounting (Accounting I)
Accounting
ISBN:9781305961883
Author:Carl Warren
Publisher:Cengage Learning
Managerial Accounting
Accounting
ISBN:9781337912020
Author:Carl Warren, Ph.d. Cma William B. Tayler
Publisher:South-Western College Pub
Introduction to Divisional performance measurement - ACCA Performance Management (PM); Author: OpenTuition;https://www.youtube.com/watch?v=pk8Mzoqr4VA;License: Standard Youtube License