Divisional Performance Analysis and EvaluationThe vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Investeassets and condensed income statement data for the past year for each division are as follows:SalesCost of goods soldOperating expensesInvested assetsRequired:Road Bike Division$ 5,610,0002,468,0002,076,1005,100,000Mountain Bike Division$ 5,880,0002,764,0001,763,6004,200,0001. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no service departmentcharges.Free Ride Bike CompanyDivisional Income StatementsFor the Year Ended December 31, 20Y7Road Bike Division Mountain Bike DivisionSalesCost of goods soldGross profitOperating expensesIncome from operations

Divisional income statements shows the financial performance of an operating unit within a large…

Answered: Divisional Performance Analysis and…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter10: Evaluating Decentralized Operations

Section: Chapter Questions

Problem 5PB: Divisional performance analysis and evaluation The vice president of operations of Free Ride Bike...

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Divisional performance analysis and evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Instructions 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations. 2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. Round percentages and the investment turnover to one decimal place. 3. If managements minimum acceptable return on investment is 10%, determine the residual income for each division. 4. Discuss the evaluation of the two divisions, using the performance measures determined in parts (1), (2), and (3).
Divisional performance analysis and evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Line Item Description Road BikeDivision Mountain BikeDivision Sales $3,080,000 $3,220,000 Cost of goods sold 1,355,000 1,513,000 Operating expenses 1,170,600 1,224,000 Invested assets 2,800,000 2,300,000 Required: Question Content Area 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations. Free Ride Bike CompanyDivisional Income StatementsFor the Year Ended December 31, 20Y7 Line Item Description Road BikeDivision Mountain BikeDivision Sales $Sales $Sales Cost of goods sold Cost of goods sold Cost of goods sold Gross profit $Gross profit $Gross profit Operating expenses…
Divisional performance analysis and evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Line Item Description Road BikeDivision Mountain BikeDivision Sales $3,080,000 $3,220,000 Cost of goods sold 1,355,000 1,513,000 Operating expenses 1,170,600 1,224,000 Invested assets 2,800,000 2,300,000 Required: Question Content Area 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations. Free Ride Bike CompanyDivisional Income StatementsFor the Year Ended December 31, 20Y7 Line Item Description Road BikeDivision Mountain BikeDivision Sales $Sales $Sales Cost of goods sold Cost of goods sold Cost of goods sold Gross profit $Gross profit $Gross profit Operating expenses…
Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Road Bike Division Mountain Bike Division Sales $1,728,000 $1,760,000 Cost of goods sold 1,380,000 1,400,000 Operating expenses 175,200 236,800 Invested assets 1,440,000 800,000 Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations. Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 20Y7 Road Bike Division Mountain Bike Division Sales $ $ Cost of goods sold Gross profit $ $ Operating expenses Operating income $ $ 2. Using the DuPont formula for return on investment, determine the…
Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Road Bike Division Mountain Bike Division Sales $1,728,000 $1,760,000 Cost of goods sold 1,380,000 1,400,000 Operating expenses 175,200 236,800 Invested assets 1,440,000 800,000 Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations. Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 20Y7 Road Bike Division Mountain Bike Division Sales $fill in the blank e15b55006fabff7_1 $fill in the blank e15b55006fabff7_2 Cost of goods sold fill in the blank e15b55006fabff7_3 fill in the blank e15b55006fabff7_4 Gross profit…
Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Road Bike Division Mountain Bike Division Sales $1,728,000 $1,760,000 Cost of goods sold 1,380,000 1,400,000 Operating expenses 175,200 236,800 Invested assets 1,440,000 800,000 Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no service department charges. Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 20Y7 Road Bike Division Mountain Bike Division Sales $ $ Cost of goods sold Gross profit $ $ Operating expenses Income from operations $ $ 2. Using the DuPont formula for return on investment, determine the…
Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Road Bike Division Mountain Bike Division Sales $ 3,190,000 $ 3,360,000 Cost of goods sold 1,404,000 1,579,000 Operating expenses 1,275,600 1,344,200 Invested assets 2,900,000 2,400,000 Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no service department charges. Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 20Y7 Road Bike Division Mountain Bike Division Sales $fill in the blank 747434fe2fcbfee_1 $fill in the blank 747434fe2fcbfee_2 Cost of goods sold fill in the blank 747434fe2fcbfee_3 fill in the blank 747434fe2fcbfee_4 Gross…
Divisional Performance Analysis and Evaluation The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Road Bike Division Mountain Bike Division Sales $2,090,000 $2,240,000 Cost of goods sold 920,000 1,053,000 Operating expenses 793,800 851,000 Invested assets 1,900,000 1,600,000 Required: 1. Prepare condensed divisional income statements for the year ended December 31, 20Y7, assuming that there were no support department allocations. Free Ride Bike Company Divisional Income Statements For the Year Ended December 31, 20Y7 Road Bike Division Mountain Bike Division Sales Cost of goods sold Gross profit Operating expenses Operating income $ 2. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and rate of return on investment for each division. If…
2. Using the DuPont formula, determine the profit margin, investment turnover, and return on investment for each division. (Round to 2nd decimal places). 3. If management desires a minimum acceptable rate of return of 8%, determine the residual income for each division. 4. Discuss the evaluation of the two divisions, using the performance measures determined in parts (1), (2), and (3).
The vice president of operations of Scott Hall and Associates is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Category Sales Cost of goods sold Operating expenses Invested assets C. Road Bike Division $1,750,000 1,300,000 202,000 1,400,000 Mountain Bike Division $1,810,000 1,440,000 236,800 800,000 Instructions a. Prepare condensed divisional income statements for the year ended December 31, 2021, assuming that there were no service department charges. b. Using the DuPont formula for return on investment, determine the profit margin percentage, investment turnover, and return on investment for each division. (Round percentages and the investment turnover to two places behind the decimal.) If management's minimum acceptable return on investment is 10%, determine the residual income for each division. d. In your own words evaluate the performance of the…
The vice president of operations of Free Ride Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year for each division are as follows: Category Road Bike Division Mountain Bike Division Sales $1,750,000 $1,810,000 Cost of goods sold Operating expenses 1,300,000 1,440,000 202,000 236,800 800,000 Invested assets 1,400,000 Instructions a. Prepare condensed divisional income statements for the year ended December 31, 2020, assuming that there were no service department charges. b. Using the DuPont formula for return on investment, determine the profit margin, investment turnover, and return on investment for each division. (Round percentages and the investment turnover to one decimal place.) c. If management's minimum acceptable return on investment is 10%, determine the residual income for each division. d. Discuss the evaluation of the two divisions, using the performance measures…
The vice president of operations of Moab Bike Company is evaluating the performance of two divisions organized as investment centers. Invested assets and condensed income statement data for the past year ending October 31, 20Y9, for each division are as follows: (P14-5) Touring Bike Division Trail Bike Division Sales $1,500,000 $5,00 Cost of goods sold Operating expenses Invested assets 900,000 4,000,000 495,000 968,000 750,000 3,600,000 Instructions 1. Prepare condensed divisional income statements for the year ended October 31, 20Y9, assuming that there were no service department charges. Touting Bike Division Trial Bike Division

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