Conner Manufacturing has two major divisions. Management wants to compare their relative performance. Information related to the two divisions is as follows: Division 1: Sales: Expenses: Asset investment: $200,000 $150,000 $1,000,000 Division 2: Sales: $45,000 Expenses: $35,000 Asset investment: $200,000 Conner currently requires investments to meet a rate of return on asset investment of 5%. Which division has the greatest level of "residual income"? Select one: O O O a. Division 1 b. Division 2 c. Both divisions have the same return on investment ratio
Q: atement of Cost of Goods Manufactured for a Manufacturing Company Cost data for Firetree…
A: The objective of this question is to prepare a cost of goods manufactured statement for Firetree…
Q: Spinners, Co. manufactures wheel rims. The accounting office will be following ABC allocation rates…
A: ActivityPredetermined Overhead Allocation RateTotal estimated quantity of the Allocation Base…
Q: Branson Corp. purchased a new machine for its business. The following list shows the various…
A: As per IFRS/IAS 16 Property, plant and equipment the capitalized cost of machine consists of…
Q: Calculate the amount of depreciation to report during the year ended December 31 for equipment that…
A: Lets understand the basics.In straight line basis, depreciation gets calculated in equal installment…
Q: Zing Coffee Company produces Columbian coffee in batches of 6,500 pounds. The standard quantity of…
A: The differential analysis is performed to compare the different alternatives available with the…
Q: Which method gives higher interest expense in the last year when the bonds are issued for more than…
A: straight-line method of accounting for interest expense on bonds is incorrect as it gives the equal…
Q: Why would a new partner who pays more for a partnership interest than the selling partner’s outside…
A: Section 754 election allows a partnership to make special basis adjustments under certain…
Q: Problem 1-22 (Algo) Cost Terminology; Contribution Format Income Statement [LO1-2, LO1-4, LO1-6]…
A: Lets understand the basics.Total manufacturing costs is a total of direct material, direct labor and…
Q: 6) The Stuart Smalley Corporation has 1,000 cases of self-help magazines that were printed at a cost…
A: Lets understand the basics.When management has a option to sale after process further then…
Q: Angel Company is preparing its December 31, 2022 financial statements. On February 1, 2023, a…
A: The objective of the question is to determine the correct accounting treatment for a lawsuit that…
Q: The following information is provided for Crank It Up Corp., a manufacturer of stereo systems. Crank…
A: Under activity-based costing method, the cost is allocated to each activity based on its…
Q: Mechforce, Incorporated had net income of $106,100 for the year ended December 31, 2022. At the…
A: The Number of common shares issued is the common stock.Treasury stock is shares repurchased.Treasury…
Q: Balance Sheets: Accounts receivable, net Income statements: Sales revenue Macroware Corporation…
A: Average collection period is calculated by dividing number of days in a period by accounts…
Q: A company issues $25450000, 7.8%, 20-year bonds to yield 8% on January 1, 2024. Interest is paid on…
A: The interest expense represents the actual interest expense on the bonds. The cash interest…
Q: In 2022, management at Pink Paper Company increased the estimated useful lives of its equipment by…
A: The objective of the question is to determine the correct accounting treatment for a change in the…
Q: Exercise 10-7 (Algo) Direct Materials Variances [LO10-1] Huron Company produces a commercial…
A: The variance is calculated as the difference between the standard and actual cost production data.…
Q: The following inventory was available for sale during the year for Trusted Tools: Beginning…
A: Under the First in, First out method, the goods that come first are also sold first. Hence, the…
Q: Assume that DroneTech's 3 year pro-forma is below. Assume that the appropriate discount rate is 20%.…
A: The present value of earnings is the value which has been determined when the earnings of the years…
Q: Calculate the predetermined overhead rate for 2017, assuming Lott Company estimates total…
A: The Predetermined overhead rate is the ratio of estimated manufacturing overhead costs and the…
Q: Marquis Company estimates that annual manufacturing overhead costs will be $800,000. Estimated…
A: The Predetermined overhead rate is the ratio of estimated overhead costs and the estimated…
Q: Bandara Gold Inc.'s equity section on the October 31, 2023, balance sheet showed the following…
A: The stock split increases the number of shares issued and outstanding. The stock split does not…
Q: Bricker Corp. estimates the allowance for uncollectible accounts at 3% of the ending balance of…
A: Lets understand the basics.Accounts receivable : Money that the business will be receiving from its…
Q: Assets Cash Accounts receivable Inventory FV-OCI investments in shares Land Equipment Accumulated…
A: Operating activities Note 1 :- When current assets are increase then cash flows are decrease…
Q: The management of Ballard MicroBrew is considering the purchase of an automated bottling machine for…
A: Depreciation means reduction in value of asset over the useful life.Annual depreciation = (Cost of…
Q: King Company is preparing its December 31, 2023 financial statements. The company had accrued bad…
A: The objective of the question is to determine the correct accounting treatment for a subsequent…
Q: A company reports the following: Line Item Description Amount Sales $1,292,100 Average…
A: The objective of this question is to calculate the accounts receivable turnover and the days' sales…
Q: Parker Plastic, Incorporated, manufactures plastic mats to use with rolling office chairs. Its…
A: The variance is the difference between the actual and standard cost data. The variance can be…
Q: Dakota Security Systems (DSS) is a decentralized organization that evaluates divisional management…
A: “Since you have posted a question with multiple sub parts, we will provide the solution only to the…
Q: B) C) D) 20) Gilly Company is considering eliminating its School Supplies Division, which reported a…
A: Operating income or loss is the amount of money earned or loss incurred by the entity from its daily…
Q: QOn February 15th, Jody had $17,000 in her RRSP. On that same day, she made a contribution of…
A: The Home Buyers' Plan (HBP) is a program in Canada that allows individuals to withdraw up to from…
Q: Required information [The following information applies to the questions displayed below.] On…
A: Answer:- The amount of money spent by a business for borrowed cash is known as an interest…
Q: Wildhorse Corporation operates in an industry that has a high rate of bad debts. Before any year-end…
A: Bad debt expense is the amount of accounts receivable that are no longer receivable from customers…
Q: olitans Manufacturing generated the following activity for July for its current jobs. Total costs…
A: Manufacturing overhead is allocated on the basis of machine hours worked for a job and the rate of…
Q: The actual and planned data for Underwater University for the Fall term were as follows: Actual…
A: Income statement is the one which is prepared by the entity to determine its costs and profits…
Q: The following information is for the inventory of mini-kettles at Flounder Company Limited for the…
A: INVENTORY VALUATIONInventory Valuation is a Method of Calculation of Value of Inventory at the End…
Q: Edwards Corporation operates hair salons under various brand names. The following is a simplified…
A: Trial balance :— It is the statement that shows list of final ending balances of all ledger accounts…
Q: Problem 12-05 (Algo) [LO 12-3] Ms. Singh, who is in the 37 percent tax bracket, owns a residential…
A: Tax cost to Ms. Singh = Taxable Income from apartment complex × Ms. Singh marginal tax rate=…
Q: Metropolitans Manufacturing generated the following activity for July for its current jobs. Total…
A: The overhead is applied to the production on the basis of the pre-determined overhead rate. The…
Q: Corvi Corporation produces and sells one product. The budgeted selling price per unit is $126.…
A: Cash collection budget :— This budget is prepared to estimate the collection of sales from customers…
Q: Harlan Mining Co. has recently decided to go public and has hired you as an independent CPA. One…
A: Cash flow :A cash flow statement is a financial statement that depicts a summary of the amount of…
Q: Perdue Company purchased equipment on April 1 for $73,440. The equipment was expected to have a…
A: Depreciation is the non-cash expense charged on the non-current assets. It is reported on the income…
Q: Crane Corporation is projecting a cash balance of $31,800 in its December 31, 2024, balance sheet.…
A: CASH BUDGET Cash Budget is a detailed budget of cash income and cash expenditure incorporating both…
Q: Division Asia-Pacific Central and South America Europe North America Minutes (Thousands) 280 608…
A: Joint costs means the costs incurred in producing multiple products simultaneously from the same raw…
Q: Castillo Styling is a wholesaler of hair supplies. Castillo Styling uses a perpetual inventory…
A: Cost of goods sold = Cost of goods sold for cash + Cost of goods sold on account - goods returned…
Q: Kiddie World uses a periodic inventory system and the retail inventory method to estimate ending…
A: Under LIFO method, Goods that are purchased at last are sold first i.e. goods purchased at the…
Q: River Signorini works for New & Old Apparel, which pays employees on a semimonthly basis. River's…
A: Social security tax: Employee's pension and benefit for disability are secured through the social…
Q: (Pro forma accounts receivable balance calculation) The accounts receivable for Pastors Brewing…
A: A cash collection budget is a crucial financial document that provides a detailed overview of the…
Q: Gibson Corporation, which has three divisions, is preparing its sales budget. Each division expects…
A: SALES BUDGET Sales budget is the Future Forcast of Sales based on Present Sinario.Sales budget is a…
Q: 7-24 According to its income statement, Choxite Manufacturing's operating income, EBIT, is $600,000,…
A: Formula EVA ( Economic Value Added ) = NOPAT - WACC × Invested CapitalGiven WACC = 15%Invested…
Q: McGuire Corporation began operations in 2024. The company purchases computer equipment from…
A: An income statement is prepared for a particular period, which helps the company to determine the…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
- Banyan Industries has two divisions, a tax rate of 30%, and a minimum rate of return of 20%. Division A has a weighted average cost of Capital of 9.5% and is looking at a new project that will generate a profit of $1,200,000 from a machine that costs $4,000,000. Division B has a weighted average cost of capital of 9.5% and is looking at a new project that will generate a profit of $1,350,000 from a machine that costs $5,000.000. A. Calculate the EVA for each of Banyans divisions. B. Calculate the RI for each of Banyans division. C. If Banyan uses EVA to evaluate the projects, which division has the better project and by how much? D. If Banyan uses RI, which division has the better project and by how much? E. What are some of the reasons for the similarity or difference that you found in the use of EVA versus RI?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…The following information is related to the current operation of Kenanga Branch. Operating income 5,000,000 Sales revenue 62, 500,000 Average operating asset 25,000,000 Average balance in current liabilities 13,400,000 The management of the company has decided that the minimum return required is 11 percent. Residual income is another approach that can be used to measure performance of an investment centre. Define residual income and determine the residual income for Kenanga Branch.
- Banderas, Inc. has three investment centers, Red, Brown, and Black. The following data is available for each of these investment centers. BANDERAS, INC. DATA FOR INVESTMENT CENTERS OF COMPANY Red Operating Income $ A $ Brown E $ Sales Revenue B 1,000,000 Black I 1,500,000 Average Investment in Assets 300,000 500,000 J Profit Margin Ratio C 15% 10% Asset Turnover Ratio 4 F K Return on Investment (ROI) 25% G 25% Minimum Required Rate of Return 20% H L Residual Income D 50,000 30,000 REQUIRED: Using the attached answer sheets, compute the missing items A through L for Banderas, Inc. Round all percentages to two decimal places (four decimal places in all), all dollar amounts to the nearest whole dollar, and all other amounts to two decimal places.The Magellan Division of Global Corporation, which has income of $250,000 and an asset investment of $1,562,500, is studying an investment opportunity that will cost $450,000 and yield a profit of $67,500. Assuming that Global uses an imputed interest charge of 14%, would the investment be attractive to:1—Divisional management if ROI is used to evaluate divisional performance?2—Divisional management if residual income (RI) is used to evaluate divisional performance?3—The management of Global Corporation? Attractive to Magellan: ROI Attractive to Magellan: RI Attractive to Global a. Yes; Yes; Yes b. Yes; No; Yes c. No; Yes; Yes d. No; No; NoAugustus Electrical Company has 2 divisions, one in Georgetown and one in Berbice Guyana and information on the both divisions are as follows: Georgetown Berbice Total assets $100,000 $500,000 Current liabilities 25,000 150,000 Revenue 50,000 50,000 Income before tax 20,000 75,000 Required: Calculate the return on investment (ROI) using net income and total assets as the measure of income and investment for the Berbice division. a.150% b.1.5% c.15% d.20%
- Megamart provides the following information on its two investment centers. Investment Center Electronics Sporting goods Sales $ 63,460,000 19,050,000 Income $ 3,173,000 2,286,000 Average Assets $ 16,700,000 12,700,000 Exercise 22-10 (Algo) Computing return on investment and residual income; investing decision LO A1 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%.Shaq Company operates with three segments: Louisiana, Orlando, and Los Angeles.Data regarding these segments is as follows: LouisianaSegment OrlandoSegment Los AngelesSegment Contribution to indirect expenses $328,500 $207,600 $155,500 Assets directly used & identified with segment $1,858,700 $1,410,000 $742,600 1. Calculate the return on investment for each segment. Rank them from highest to lowest. Round percent to 1 decimal place. LouisianaSegment OrlandoSegment Los AngelesSegment Segment Net Income Investment base (assets) ROI (%) Rankings (1,2, or 3, where 1 is the best) 2. Assume the cost of capital is 14% for a segment. Calculate residual income for each segment. Rank them from highest to lowest. Round percent to 1 decimal place. LouisianaSegment OrlandoSegment Los AngelesSegment Segment Net Income Investment base (assets) Cost of Capital (%) Minimum Income Residual Income…Use the following information for the Problems below: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 8 percent. Sales revenue Income Average investment Sales margin k Capital turnover ROI Residual income Division A ? Division B Division C $ 11,000,000 ? $ 550,000 $ 2,160,000 ? ? $ 2,610,000 ? 20% ? 25% 3 ? ? ? ? 20% ? ? $ 130,000 Required: The following data pertain to three divisions of Nevada Aggregates, Incorporated. The company's required rate of return on invested capital is 8 percent. Note: Round "Capital turnover" answers to 2 decimal places. Division A Division B Division C Sales revenue Income S 40,700,000 $ 1,840,000 $ 8,140,000 Average investment $ 10,175,000 + Sales margin 20 % % 25 % Capital turnover ROI Residual income 1.00 % % 20 % $ 489,000
- 1. Roy Toy, a division of Fun Corp. has a net operating income of $60000 and average operating assets of $300000. The required rate of return for the company is 15%. What is the division's residual income? a. $240000 b. $45000 c. $15000 d. $51000 2. If the manager of Roy To division is evaluated based on residual income, will she want to make an investment of $100000 that would generate an additional net operating income of $18000 per year?a. Yesb. NoTan 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 >For its three investment centres, National Inc. accumulates the following data: Centre I Centre II Centre III Sales $2,000,000 $4,000,000 $4,000,000 Operating income 1,300,000 1,840,000 2,880,000 Average Operating Assets 5,000,000 8,000,000 12,000,000 Minimum required return 15% 20% 25% 1.) What is the return on investment (ROI) for Centre I? a. 20% b. 23% c. 24% d. 26% 2.)The residual income (RI) for Centre III is a. $150,000 b. $550,000 c. $240,000 d. -$120,000 3.)The ranking of the centres based on return on investment (ROI) with the best performer listed first is as follows a. Centre I, Centre II, Centre III b. Centre I, Centre III, Centre II c. Centre III, Centre II, Centre I d. Centre II, centre III, Centre I 4.)What is the return on investment (ROI) for Centre II? a. 20% b. 23% c. 24% d. 26%