3. Based on segment margin and average assets, compute the profit margin4. Based on segment margin and average assets, compute the asset turnover5. Based on segment margin and average assets, compute the ROI. Creative Business Solutions (CBS), a division of Doug Jorgenson CPA, buys andinstalls modular office components. For the most recent year, the division had thefollowing performance targets:Asset turnover2.5Profit marginTarget rate of return on investments for RI 13%Cost of capitalIncome tax rate6%10%40%Actual information concerning the company's performance for last year follows:Total assets at beginning of yearTotal assets at end of yearTotal invested capital (annual average).Sales$3,600,0005,300,0008,000,0009,000,0003,650,0004,770,000675,000Variable operating costsDirect fixed costsAllocated fixed costs

WORKING : 1. SEGMENT MARGIN FOR CBS : PARTICULARS AMOUNT $ SALES $9,000,000 VARIABLE…

Creative Business Solutions (CBS), a division of Doug Jorgenson CPA, buys and installs modular office components. For the most recent year, the division had the following performance targets: Asset turnover 2.5 6% Profit margin Target rate of return on investments for RI 13% Cost of capital Income tax rate 10% 40% Actual information concerning the company's performance for last year follows: Total assets at beginning of year Total assets at end of year Total invested capital (annual average). Sales $3,600,000 5,300,000 8,000,000 9,000,000 3,650,000 4,770,000 675,000 Variable operating costs Direct fixed costs Allocated fixed costs

Creative Business Solutions (CBS), a division of Doug Jorgenson CPA, buys and installs modular office components. For the most recent year, the division had the following performance targets: Asset turnover 2.5 6% Profit margin Target rate of return on investments for RI 13% Cost of capital Income tax rate 10% 40% Actual information concerning the company's performance for last year follows: Total assets at beginning of year Total assets at end of year Total invested capital (annual average). Sales $3,600,000 5,300,000 8,000,000 9,000,000 3,650,000 4,770,000 675,000 Variable operating costs Direct fixed costs Allocated fixed costs

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 27E: Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the...

See similar textbooks

Similar questions

Margin, Turnover, Return on Investment, Average Operating Assets Elway Company provided the following income statement for the last year: At the beginning of last year, Elway had 28,300,000 in operating assets. At the end of the year, Elway had 23,700,000 in operating assets. Required: 1. Compute average operating assets. 2. Compute the margin and turnover ratios for last year. (Note: Round the answer for margin ratio to two decimal places.) 3. Compute ROI. (Note: Round answer to two decimal places.) 4. CONCEPTUAL CONNECTION Briefly explain the meaning of ROI. 5. CONCEPTUAL CONNECTION Comment on why the ROI for Elway Company is relatively high (as compared to the lower ROI of a typical manufacturing company).
Financial information for BDS Enterprises for the year-ended December 31, 20xx, was gathered from an accounting intern, who has asked for your guidance on how to prepare an income statement format that will be distributed to management. Subtotals and totals are included in the information, but you will need to calculate the values. A. In the correct format, prepare the income statement using the following information: B. Calculate the profit margin, return on investment, and residual income. Assume an investment base of $100,000 and 6% cost of capital. C. Prepare a short response to accompany the income statement that explains why uncontrollable costs are included in the income statement.
During the current year, Sokowski Manufacturing earned income of $327,600 from total sales of $5,040,000 and average capital assets of $12,000,000. A. Based on this information, calculate asset turnover. If required, round your answer to two decimal places. times B. Assume sales margin is 6.5%, what is the total ROI for the company during the current year?. If required, round your answer to one decimal place. %
During the current year, Sokowski Manufacturing earned income of $347,760 from total sales of $5,520,000 and average capital assets of $12,000,000. A. Based on this information, calculate asset turnover. If required, round your answer to two decimal places. fill in the blank 1 times B. Assume sales margin is 6.3%, what is the total ROI for the company during the current year?. If required, round your answer to one decimal place. fill in the blank 2%
Following is information from Skyway Inc. for the year (in thousands). Total annual revenue $3,206,980 Total revenue growth rate 5.0% Terminal revenue growth rate 2% Net operating profit margin (NOPM) 8.2% Net operating asset turnover (NOAT) 3.42 Projected total revenue for the following year would be: Select one: a. $3,469,952 b. None of these are correct c. $3,316,659 d. $3,271,120 e. $3,367,329
Lousiville Inc. reported the following financial data for one of its divisions for the year; average invested assets of $490,000; sales of $990,000; and income of $113,000. The investment turnover is: Multiple Choice 2.02. 21.30. 433.60. 49.50. 11.40.
Following are financial statement numbers and ratios for Martin Corp. for the year ended December 31, Year 1. Total revenue (in millions) $47,248 Net operating profit margin (NOPM) 8.8% Net operating asset turnover (NOAT) 3.3 If we expected revenue growth of 3.5% in the next year, what would projected revenue be for Year 2? Select one: a. $47,248.0 b. $44,598.3 c. None of these are correct d. $48,901.7 e. $53,205.0
Your company has net sales revenue of $43 million during the year. At the beginning of the year, fixed assets are $15 million. At the end of the year, fixed assets are $17 million. What the fixed asset turnover ratio? Multiple Choice 2.87 1.34 2.53 269
Financial data for Joel de Paris, Incorporated, for last year follow: Joel de Paris, Incorporated Balance Sheet Assets Cash Accounts receivable Inventory Plant and equipment, net Investment in Buisson, S.A. Land (undeveloped) Total assets Liabilities and Stockholders' Equity Accounts payable Long-term debt Stockholders' equity Total liabilities and stockholders' equity Joel de Paris, Incorporated Income Statement Sales Operating expenses Net operating income Interest and taxes: Interest expense Tax expense Net income $ 121,000 207,000 $4,416,000 3,665,280 750,720 328,000 $ 422,720 Beginning Balance $ 136,000 339,000 568,000 857,000 395,000 251,000 $ 2,546,000 Ending Balance $ 131,000 479,000 488,000 842,000 435,000 253,000 $ 2,628,000 $ 349,000 $ 374,000 983,000 1,189,000 983,000 1,296,000 $ 2,546,000 $ 2,628,000 The company paid dividends of $315,720 last year. The “Investment in Buisson, S.A.," on the balance sheet represents an investment in the stock of another company. The…
The Holmes Division recorded operating data as follows for the past year: Sales Operating Income Average Operating Assets Shareholders' Equity Residual Income $200,000 $ 25,000 $100,000 $ 80,000 $ 13,000 For the past year, what was the minimum required rate of return? A) B) C) D) 12%. 11%. 14%. 13%.
The Dry Wall Division reports the following operating data for the past two years: Year 1 Year 2 Margin 12 % ? Asset Turnover 3.0 2.0 Average operating assets ? $ 152,500 Net operating income $ 41,900 ? Stockholders’ equity $ 82,500 $ 122,500 Sales ? ? The return on investment at the Dry Wall Division was exactly the same in Year 1 and Year 2.Net operating income in Year 2 amounted to: Multiple Choice $41,900. $30,000. $36,600. $54,900.
Calculating Average Operating Assets, Margin, Turnover, and Return on Investment East Mullett Manufacturing earned operating income last year as shown in the following income statement: Sales $531,250 Cost of goods sold 280,000 Gross margin $251,250 Selling and administrative expense 180,000 Operating income $71,250 Less: Income taxes (@ 40%) 28,500 Net income $42,750 At the beginning of the year, the value of operating assets was $390,000. At the end of the year, the value of operating assets was $460,000. Required: For East Mullett Manufacturing, calculate the following: 1. Average operating assets 2. Margin (round to two decimal places) % 3. Turnover (round to two decimal places) 4. Return on investment (round to one decimal place) %