Kalu Company, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional information was available for the past year: View the information. Management has a 23% target rate of return for each division. Calculate each division's RI. Interpret your results. First, select the formula to calculate residual income (RI). Residual income Residential division's RI Professional division's RI 196000 exceeding management's expectations. O Information Net Sales Revenue Operating Income 600,000 $ 66,640 S 1.160,000 162,360 Average Total Assets 196,000 396,000 Residential S Professional

Kalu Company, a national manufacturer of lawn-mowing and snow-blowing equipment, segments its business according to customer type: professional and residential. The following divisional information was available for the past year: View the information. Management has a 23% target rate of return for each division. Calculate each division's RI. Interpret your results. First, select the formula to calculate residual income (RI). Residual income Residential division's RI Professional division's RI 196000 exceeding management's expectations. O Information Net Sales Revenue Operating Income 600,000 $ 66,640 S 1.160,000 162,360 Average Total Assets 196,000 396,000 Residential S Professional

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter7: Allocating Costs Of Support Departments And Joint Products

Section: Chapter Questions

Problem 30E: A company uses charging rates to allocate service department costs to the using departments. The...

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Greenlink, Inc. produces environment-friendly construction material. The following information is available about the status and operations of the Manufacturing Division of Greenlink, which has a hurdle rate (minimum required rate of return) of 7%. Divisional identifiable average assets $ 414,459 Divisional income from operations $ 18,848 Divisional sales revenue $ 365,726 a. Compute the ROI for the Manufacturing Division. (Round your answer to 1 decimal place.) b. Break the Manufacturing Division ROI down using the DuPont formula.
Compute the residual income for the Manufacturing Division. Greenlink, Inc. produces environment-friendly construction material. The following information is available about the status and operations of the Manufacturing Division of Greenlink, which has a hurdle rate (minimum required rate of return) of 7%. Divisional identifiable average assets $ 414,459 Divisional income from operations $ 18,848 Divisional sales revenue $ 365,726
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A company uses charging rates to allocate service department costs to the using departments. The accountant compiled the following information on one of the service departments: If Department K plans to use 1,350 hours of the service departments service in the coming year, how much of the service departments cost is allocated to Department K? a. 3,375 b. 27,300 c. 26,325 d. 23,950
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Raner, Harris & Chan is a consulting firm that specializes in information systems for medical and dental clinics. The firm has two offices—one in Chicago and one in Minneapolis. The firm classifies the direct costs of consulting jobs as variable costs. A contribution format segmented incomestatement for the company’s most recent year is given: Required:1. Compute the companywide break-even point in dollar sales. Also, compute the break-even point for the Chicago office and for the Minneapolis office. Is the companywide break-even point greater than, less than, or equal to the sum of the Chicago and Minneapolis break-evenpoints? Why?2. By how much would the company’s net operating income increase if Minneapolis increased its sales by $75,000 per year? Assume no change in cost behavior patterns.3. Refer to the original data. Assume that sales in Chicago increase by $50,000 next year and that sales in Minneapolis remain unchanged. Assume no change in fixed costs.a. Prepare a new…
The cost of the personnel department at the Mason Company has always been charged to the production departments based upon number of employees. Recently, opinions gathered from the department managers indicated that the number of new hires might also be a predictor of personnel costs to be assigned. Total personnel department costs are $120,000. Department Department Department Cost Driver A B C Number of employees 300 250 50 The number of new hires 15 25 10 Required: Using the above data, prepare a report that contrasts the different amounts of personnel department cost that would be allocated to each of the production departments if the cost driver used is a. number of employees. b. the number of new hires. c. Which cost…
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